SHARE EXCHANGE AGREEMENT AMONG HOME SYSTEM GROUP HOLY (HK) LIMITED OCEANIC WELL PROFIT, INC. ZHONGSHAN CITY JUXIAN GAS OVEN CO., LTD. AND THE SHAREHOLDERS OF ZHONGSHAN CITY JUXIAN GAS OVEN CO., LTD. LISTED ON SCHEDULE 1 DATED AS OF April 20, 2007...
Exhibit
10.1
AMONG
HOME
SYSTEM GROUP
HOLY
(HK) LIMITED
OCEANIC
WELL PROFIT, INC.
ZHONGSHAN
CITY JUXIAN GAS OVEN CO., LTD.
AND
THE
SHAREHOLDERS
OF
ZHONGSHAN
CITY JUXIAN GAS OVEN CO., LTD.
LISTED
ON SCHEDULE 1
DATED
AS OF
April
20, 2007
INDEX
OF SCHEDULES AND EXHIBITS
Exhibits:
A.
Certain Definitions
B.
Form
of Promissory Note
Schedules:
Shareholders
of Zhongshan City Juxian Gas Oven Co., Ltd.
SHARE
EXCHAGE AGREEMENT
This
Share Exchange Agreement (the “Agreement”)
dated
as of April
20,
2007,
is
entered into by and among Home System Group., a Nevada corporation, Holy (HK)
Limited, a Hong Kong corporation and a wholly own subsidiary of Home System
Group, Oceanic Well Profit, Inc., a wholly own subsidiary of Holy (HK) Limited,
Zhongshan City Juxian Gas Oven Co., Ltd., a Zhongshan City corporation in China,
and the shareholders of Zhongshan City Juxian Gas Oven Co., Ltd., listed on
Schedule 1 to this Agreement (each, a “Shareholder”
and,
collectively, the “Shareholders”).
RECITALS
A.
The
Shareholders own a certain percentage ownership of Zhongshan City Juxian Gas
Oven Co., Ltd. (the “Shares”)
set
forth opposite each Shareholder’s name on Schedule 1, which Shares collectively
constitute 100% ownership of Zhongshan City Juxian Gas Oven Co., Ltd.
B.
Oceanic Well Profit, Inc. is a wholly own subsidiary of Holy (HK) Limited,
and
Holy (HK) Limited is a wholly own subsidiary of Home System Group. Oceanic
Well
Profit, Inc. desires to purchase from the Shareholders, and the Shareholders
desire to sell to Oceanic Well Profit, Inc. the Shares in exchange for shares
of
Home System Group Common Stock, all on the terms and subject to the conditions
set forth in this Agreement (the “Exchange”).
C.
As a
result of the Exchange, Oceanic Well Profit, Inc. will become the sole
shareholder of Zhongshan City Juxian Gas Oven Co., Ltd. Home System Group will
own Zhongshan City Juxian Gas Oven Co., Ltd. through Holy (HK) Limited and
Oceanic Well Profit, Inc.
D.
Certain capitalized terms used in this Agreement are defined on Exhibit A.
AGREEMENT
In
consideration of the agreements, provisions and covenants set forth below,
Home
System Group, Holy (HK) Limited, Oceanic Well Profit, Inc., the Shareholders
and
Zhongshan City Juxian Gas Oven Co., Ltd., hereby agree as follows:
ARTICLE
I.
EXCHANGE
OF SHARES
1.1
AGREEMENT
TO SELL.
Upon
the
terms and subject to all of the conditions contained herein, each of the
Shareholders hereby agrees to sell, assign, transfer and deliver to Oceanic
Well
Profit, Inc., and Oceanic Well Profit, Inc. hereby agrees to purchase and accept
from each of the Shareholders, on the Closing Date, the Shares, in exchange
for
the Purchase Price set forth in Section 1.2 below.
1.2
PURCHASE
PRICE.
As
full
consideration for the sale, assignment, transfer and delivery of the Shares
by
the Shareholders to Oceanic Well Profit, Inc., and upon the terms and subject
to
all of the conditions contained herein, Home System Group shall issue to the
Shareholders an aggregate of 1,000,000 shares of Home System Group Common Stock
with restrictive legend (the “Acquisition Shares”), valued at $4.00 per share,
and pay (the “Cash Component”) an aggregate of $10,000,000 to the Shareholders.
The Cash Component is payable by Oceanic Well Profit, Inc. as follows:
$10,000,000 is payable within 24 months after the Closing of the transactions
contemplated hereby ($5,000,000 due on the first anniversary of the Closing
of
the transactions contemplated hereby, and $5,000,000 due on the second
anniversary of the Closing of the transactions contemplated hereby) as evidenced
by the promissory notes annexed hereto as Exhibit B. The parties understand
and
acknowledge that such exchange is based upon an approximate valuation of
Zhongshan City Juxian Gas Oven Co., Ltd. of US $14,000,000.
1.3
MECHANICS
OF EXCHANGE.
(a)
At
the Closing, each Shareholder shall be entitled to surrender the certificate
or
certificates that immediately prior to the Closing represented the Zhongshan
City Juxian Gas Oven Co., Ltd. Common Stock (the “Certificates”)
to the
exchange agent designated by Oceanic Well Profit, Inc. in exchange for their
portion of the Acquisition Shares and the Cash Component.
(b)
Promptly after the Closing, Home System Group or its designated exchange agent
shall make available to each Shareholder a letter of transmittal and
instructions for use in effecting the surrender of certificates representing
the
Shares in exchange for the Acquisition Shares. Upon surrender of the original
certificate representing the Shares to such exchange agent together with the
letter of transmittal, duly executed, the Shareholder shall be entitled to
receive in exchange therefore such number of Acquisition Shares as such
Shareholder has the right to receive in respect of the Certificate so
surrendered pursuant to the provisions of this Article I, and their portion
of
the Cash Component.
1.4
NO
FRACTIONAL SHARES.
No
fraction of a share of Home System Group Common Stock shall be issued in the
Exchange. In lieu of fractional shares, the Shareholders, upon surrender of
their Certificates as set forth in Section 1.3 shall be paid an amount in cash,
without interest, rounded to the nearest cent, determined by multiplying the
fractional interest to which such Shareholder would otherwise be entitled by
$4.00 (the Home System Group Stock Price per share agreed by all parties on
April 12, 2007).
1.5
CLOSING.
The
closing of the transactions contemplated by this Agreement (the “Closing”)
shall
take place in New York, on or before June
30,
2007,(the “Closing
Date”);
provided, however, that if all of the other conditions set forth in Articles
VI
and VII hereof are not satisfied or waived, unless this agreement has been
terminated under Section 9 hereof, or at such date, the Closing Date shall
be
the business day following the day on which all such conditions have been
satisfied or waived, or at such other date, time and place as Home System Group,
Holy (HK) Limited, Oceanic Well Profit, Inc., Zhongshan City Juxian Gas Oven
Co., Ltd., and the Shareholders shall agree.
ARTICLE
II.
REPRESENTATIONS
AND WARRANTIES OF ZHONGSHAN CITY JUXIAN GAS OVEN CO., LTD.
Each
of
Zhongshan City Juxian Gas Oven Co., Ltd. and the Shareholders represents and
warrants jointly and severally to Home System Group and Oceanic Well Profit,
Inc. as follows:
2.1
ORGANIZATION
AND QUALIFICATION.
Zhongshan
City Juxian Gas Oven Co., Ltd. is duly incorporated, validly and in good
standing existing under the laws of China, has all requisite authority and
power
(corporate and other), governmental licenses, authorizations, consents and
approvals to carry on its business as presently conducted and as contemplated
to
be conducted, to own, hold and operate its properties and assets as now owned,
held and operated by it, to enter into this Agreement, to carry out the
provisions hereof except where the failure to be in good standing or to have
such governmental licenses, authorizations, consents and approvals will not,
in
the aggregate, either (i) have a Material Adverse Effect on the business, assets
or financial condition of Zhongshan City Juxian Gas Oven Co., Ltd., or (ii)
impair the ability of Zhongshan City Juxian Gas Oven Co., Ltd. to perform its
material obligations under this Agreement. Zhongshan City Juxian Gas Oven Co.,
Ltd. duly qualified, licensed or domesticated as a foreign corporation in good
standing in each jurisdiction wherein the nature of its activities or its
properties owned or leased requires such qualification, licensing or
domestication, except where the failure to be so qualified, licensed or
domesticated will not have a Material Adverse Effect.
2.2
SUBSIDIARIES.
Zhongshan
City Juxian Gas Oven Co., Ltd. does not own directly or indirectly, any equity
or other ownership interest in any corporation, partnership, joint venture
or
other entity or enterprise. Zhongshan City Juxian Gas Oven Co., Ltd. does not
have any direct or indirect interests of stock ownership or otherwise in any
corporation, partnership, joint venture, firm, association or business
enterprise, and is not party to any agreement to acquire such an interest.
2.3
ARTICLES
OF INCORPORATION AND BYLAWS.
The
copies of the Articles of Incorporation and bylaws of Zhongshan City Juxian
Gas
Oven Co., Ltd. (collectively, the “Organizational
Documents”)
that
have been delivered to Home System Group and Oceanic Well Profit, Inc. prior
to
the execution of this Agreement are true and complete and have not been amended
or repealed. Zhongshan City Juxian Gas Oven Co., Ltd. is not in violation or
breach of any of the provisions of the Organizational Documents, except for
such
violations or breaches which, in the aggregate, will not have a Material Adverse
Effect on Zhongshan City Juxian Gas Oven Co., Ltd.
2.4
AUTHORIZATION
AND VALIDITY OF THIS AGREEMENT.
This
Agreement and each of the Transaction Agreements constitute the legal, valid
and
binding obligation of each person or entity who is a party thereto (other than
Home System Group and Oceanic Well Profit, Inc.), enforceable against each
such
person or entity in accordance with its terms, except as such enforcement is
limited by general equitable principles, or by bankruptcy, insolvency and other
similar laws affecting the enforcement of creditors rights generally. Each
of
the Shareholders and Zhongshan City Juxian Gas Oven Co., Ltd. has all requisite
legal capacity to execute and deliver this Agreement and the Transaction
Agreements to which he or she is a party, and to perform its, his or her
obligations hereunder and thereunder. The execution and delivery by Zhongshan
City Juxian Gas Oven Co., Ltd. and each Shareholder, of this Agreement and
the
Transaction Agreements (to the extent either is a party thereto), and the
consummation of the transactions contemplated herein and therein (the
“Transactions”)
have
been authorized by all necessary corporate or other action on the part of
Zhongshan City Juxian Gas Oven Co., Ltd. and each of the Shareholders. This
Agreement and the Transaction Agreements have been duly executed and delivered
by the parties thereto (other than Home System Group and Oceanic Well Profit,
Inc.).
2.5
NO
VIOLATION.
Neither
the execution nor delivery of this Agreement or the Transaction Agreements,
nor
the consummation or performance of any of the Transactions by Zhongshan City
Juxian Gas Oven Co., Ltd. or the Shareholders will directly or indirectly:
(A)
violate or conflict with any provision of the Organizational Documents of
Zhongshan City Juxian Gas Oven Co., Ltd.; (B) result in (with or without notice
or lapse of time) a violation or breach of, or conflict with or constitute
a
default or result in the termination or in a right of termination or
cancellation of, or accelerate the performance required by, or require notice
under, any agreement, promissory note, lease, instrument or arrangement to
which
Zhongshan City Juxian Gas Oven Co., Ltd. or any of its assets are bound or
result in the creation of any Liens upon Zhongshan City Juxian Gas Oven Co.,
Ltd. or any of its assets; (C) violate any order, writ, judgment, injunction,
ruling, award or decree of any Governmental Body; (“Governmental
Body”);
(D)
violate any statute, law or regulation of any jurisdiction as such statute,
law
or regulation that relates to the Shareholders, Zhongshan City Juxian Gas Oven
Co., Ltd. or any of the assets of Zhongshan City Juxian Gas Oven Co., Ltd.;
or
(E) result in cancellation, modification, revocation or suspension of any
permits, licenses, registrations, consents, approvals, authorizations or
certificates issued or granted by any Governmental Body which are held by or
granted to the Shareholders, or Zhongshan City Juxian Gas Oven Co., Ltd. or
which are necessary for the conduct of Zhongshan City Juxian Gas Oven Co.,
Ltd.’s business; or
(ii)
to
the knowledge of Zhongshan City Juxian Gas Oven Co., Ltd. or any of the
Shareholders, cause Zhongshan City Juxian Gas Oven Co., Ltd. to become subject
to, or to become liable for the payment of, any Tax (as hereinafter defined)
or
cause any of the assets owned by Zhongshan City Juxian Gas Oven Co., Ltd. to
be
reassessed or revalued by any taxing authority or other Governmental Body.
None
of
Zhongshan City Juxian Gas Oven Co., Ltd. or the Shareholders is or will be
required to give any notice to or obtain any approval, consent, ratification,
waiver or other authorization (a “Consent”)
from
any person or entity (including, without limitation, any Governmental Body)
in
connection with (i) the execution and delivery of this Agreement or any of
the
Transaction Agreements, or (ii) the consummation or performance of any of the
Transactions.
2.6
CAPITALIZATION
AND RELATED MATTERS.
(a)
Capitalization.
The
registered capital amount of Zhongshan City Juxian Gas Oven Co., Ltd. is
RMB$500,000, which represents 100% ownership percentage of Zhongshan City Juxian
Gas Oven Co., Ltd. Except as set forth in the preceding sentence, no other
class
of capital stock or other security of Zhongshan City Juxian Gas Oven Co., Ltd.
is authorized, issued, reserved for issuance or outstanding. The Shareholders,
as of the Closing Date, are the lawful, record and beneficial owners of the
Shares set forth opposite each Shareholder’s name on Schedule 1 attached hereto.
Xxxxxxxxx Xxxxx, Xxxxxxxx Xxxxx and Xxxxxxxx Xxxxx, as of the Closing Date,
are
the lawful, record and beneficial owners of the total ownership interest of
Zhongshan City Juxian Gas Oven Co., Ltd. Oceanic Well Profit, Inc. does not
own
Zhongshan City Juxian Gas Oven Co. Ltd prior to the closing Data. The
Shareholders have, as of the date hereof and as of the Closing Date, valid
and
marketable title to their respective ownership interest of Zhongshan City Juxian
Gas Oven Co., Ltd., free and clear of all Liens (including, without limitation,
any claims of spouses under applicable community property laws) and are the
lawful, record and beneficial owners of all of the Shares. Except as is issued
to and held by the Shareholders or Zhongshan City Juxian Gas Oven Co., Ltd.,
no
other class of capital stock or other security of Zhongshan City Juxian Gas
Oven
Co., Ltd., as applicable, is authorized, issued, reserved for issuance or
outstanding. At the Closing, Oceanic Well Profit, Inc. will be vested with
good
and marketable title to the ownership or the Shares, free and clear of all
Liens
(including, without limitation, any claims of spouses under applicable community
property laws). No legend or other reference to any purported Lien appears
upon
any certificate representing the Shares. Each of the Shares has been duly
authorized and validly issued and is fully paid and nonassessable. None of
the
outstanding capital or other securities of Zhongshan City Juxian Gas Oven Co.,
Ltd. was issued, redeemed or repurchased in violation of the Securities Act
of
1933, as amended (the “Securities
Act”),
or
any other securities or “blue sky” laws.
(b)
No
Redemption Requirements.
There
are no authorized or outstanding options, warrants, equity securities, calls,
rights, commitments or agreements of any character by which Zhongshan City
Juxian Gas Oven Co., Ltd. or any of the Shareholders is obligated to issue,
deliver or sell, or cause to be issued, delivered or sold, any shares of capital
stock or other securities of Zhongshan City Juxian Gas Oven Co., Ltd. There
are
no outstanding contractual obligations (contingent or otherwise) of Zhongshan
City Juxian Gas Oven Co., Ltd. to retire, repurchase, redeem or otherwise
acquire any outstanding shares of capital stock of, or other ownership interests
in, Zhongshan City Juxian Gas Oven Co., Ltd. or to provide funds to or make
any
investment (in the form of a loan, capital contribution or otherwise) in any
other entity.
2.7
COMPLIANCE
WITH LAWS AND OTHER INSTRUMENTS.
Except
as
would not have a Material Adverse Effect, the business and operations of
Zhongshan City Juxian Gas Oven Co., Ltd. have been and are being conducted
in
accordance with all applicable foreign, federal, provincial and local laws,
rules and regulations and all applicable orders, injunctions, decrees, writs,
judgments, determinations and awards of all courts and governmental agencies
and
instrumentalities. There are no permits, bonuses, registrations, consents,
approvals, authorizations, certificates, or any waiver of the foregoing, which
are required to be issued or granted by a Governmental Body for the conduct
of
the Business as presently conducted or the ownership of the assets of Zhongshan
City Juxian Gas Oven Co., Ltd. Except as would not have a Material Adverse
Effect, Zhongshan City Juxian Gas Oven Co., Ltd. is not, and has not received
notice alleging that it is, in violation of, or (with or without notice or
lapse
of time or both) in default under, or in breach of, any term or provision of
the
Organizational Documents or of any indenture, loan or credit agreement, note,
deed of trust, mortgage, security agreement or other material agreement, lease,
license or other instrument, commitment, obligation or arrangement to which
Zhongshan City Juxian Gas Oven Co., Ltd. is a party or by which any of Zhongshan
City Juxian Gas Oven Co., Ltd.’s properties, assets or rights are bound or
affected. To the knowledge of Zhongshan City Juxian Gas Oven Co., Ltd., no
other
party to any material contract, agreement, lease, license, commitment,
instrument or other obligation to which Zhongshan City Juxian Gas Oven Co.,
Ltd.
is a party is (with or without notice or lapse of time or both) in default
thereunder or in breach of any term thereof. Zhongshan City Juxian Gas Oven
Co.,
Ltd. is not subject to any obligation or restriction of any kind or character,
nor is there, to the knowledge of Zhongshan City Juxian Gas Oven Co., Ltd.,
any
event or circumstance relating to Zhongshan City Juxian Gas Oven Co., Ltd.
that
materially and adversely affects in any way its business, properties, assets
or
prospects or that prohibits Zhongshan City Juxian Gas Oven Co., Ltd. from
entering into this Agreement and the Transaction Agreements or would prevent
or
make burdensome its performance of or compliance with all or any part of this
Agreement, the Transaction Agreements or the consummation of the Transactions
contemplated hereby or thereby.
2.8
CERTAIN
PROCEEDINGS.
There
are
no outstanding or pending proceeding(s) that has been commenced against or
involving Zhongshan City Juxian Gas Oven Co., Ltd. or any of its assets and,
to
the knowledge of Zhongshan City Juxian Gas Oven Co., Ltd. and the Shareholders,
no matters of the foregoing nature are contemplated or threatened. None of
Zhongshan City Juxian Gas Oven Co., Ltd. or the Shareholders have been charged
with, and is not threatened with, or under any investigation with respect to,
any allegation concerning any violation of any provision of any federal,
provincial, local or foreign law, regulation, ordinance, order or administrative
ruling, and is not in default with respect to any order, writ, injunction or
decree of any Governmental Body.
2.9
NO
BROKERS OR FINDERS.
None
of
Zhongshan City Juxian Gas Oven Co., Ltd., the Shareholders, or any officer,
director, independent contractor, consultant, agent or employee of Zhongshan
City Juxian Gas Oven Co., Ltd. has agreed to pay, or has taken any action that
will result in any person or entity becoming obligated to pay or entitled to
receive, any investment banking, brokerage, finder’s or similar fee or
commission in connection with this Agreement or the Transactions. Zhongshan
City
Juxian Gas Oven Co., Ltd. and the Shareholders shall jointly and severally
indemnify and hold Home System Group, Oceanic Well Profit, Inc., and Holy (HK)
Limited harmless against any liability or expense arising out of, or in
connection with, any such claim.
2.10
TITLE
TO AND CONDITION OF PROPERTIES.
Zhongshan
City Juxian Gas Oven Co., Ltd. has good, valid and marketable title to all
of
its properties and assets (whether real, personal or mixed, and whether tangible
or intangible) reflected as owned in its books and records, free and clear
of
all Liens. Zhongshan City Juxian Gas Oven Co., Ltd. owns or holds under valid
leases or other rights to use all real property, plants, machinery, equipment
and all assets necessary for the conduct of its business as presently conducted,
except where the failure to own or hold such property, plants, machinery,
equipment and assets would not have a Material Adverse Effect on Zhongshan
City
Juxian Gas Oven Co., Ltd. No Person other than Zhongshan City Juxian Gas Oven
Co., Ltd. owns or has any right to the use or possession of the assets used
in
Zhongshan City Juxian Gas Oven Co., Ltd.’s business. The material buildings,
plants, machinery and equipment necessary for the conduct of the business of
Zhongshan City Juxian Gas Oven Co., Ltd. as presently conducted are structurally
sound, are in good operating condition and repair and are adequate for the
uses
to which they are being put or would be put in the Ordinary Course of Business,
in each case, taken as a whole, and none of such buildings, plants, machinery
or
equipment is in need of maintenance or repairs, except for ordinary, routine
maintenance and repairs that are not material in nature or cost.
2.11
ABSENCE
OF UNDISCLOSED LIABILITIES.
Zhongshan
City Juxian Gas Oven Co., Ltd. has no debt, obligation or liability (whether
accrued, absolute, contingent, liquidated or otherwise, whether asserted or
unasserted, whether due or to become due, whether or not known to Zhongshan
City
Juxian Gas Oven Co., Ltd.) arising out of any transaction entered into prior
to
the Closing Date or any act or omission prior to the Closing Date which
individually or taken together would constitute a Material Adverse Effect on
Zhongshan City Juxian Gas Oven Co., Ltd. and has no debt, obligation or
liability to each other or any of the Shareholders or their affiliates, except
to the extent specifically set forth on or reserved against on the Balance
Sheet
of Zhongshan City Juxian Gas Oven Co., Ltd.
The
financial statements are consistent with the books and records of Zhongshan
City
Juxian Gas Oven Co., Ltd. and fairly present in all material respects the
financial condition, assets and liabilities of Zhongshan City Juxian Gas Oven
Co., Ltd., as applicable, taken as a whole, as of the dates and periods
indicated, and were prepared in accordance with GAAP (except as otherwise
indicated therein or in the notes thereto).
2.12
CHANGES.
Zhongshan
City Juxian Gas Oven Co., Ltd. has not, since January 01, 2006:
(a)
Ordinary
Course of Business.
Conducted its business or entered into any transaction other than in the
Ordinary Course of Business, except for this Agreement.
(b)
Suffered or experienced any change in, or affecting, its condition (financial
or
otherwise), properties, assets, liabilities, business, operations, results
of
operations or prospects which would have a Material Adverse Effect on Zhongshan
City Juxian Gas Oven Co., Ltd.;
(c)
Loans.
Made
any loans or advances to any Person other than travel advances and reimbursement
of expenses made to employees, officers and directors in the Ordinary Course
of
Business;
(d)
Compensation
and Bonuses.
Made
any payments of any bonuses or compensation other than regular salary payments,
or increase in the salaries, or payment on any of its debts in the Ordinary
Course of Business, to any of its shareholders, directors, officers, employees,
independent contractors or consultants or entry into by it of any employment,
severance, or similar contract with any director, officer, or employee,
independent contractor or consultant; Adopted, or increased in the payments
to
or benefits under, any profit sharing, bonus, deferred compensation, savings,
insurance, pension, retirement, or other employee benefit plan for or with
any
of its employees;
(e)
Liens.
Created
or permitted to exist any Lien on any of its properties or assets other than
Permitted Liens;
(f)
Capital
Stock.
Issued,
sold, disposed of or encumbered, or authorized the issuance, sale, disposition
or encumbrance of, or granted or issued any option to acquire any shares of
its
capital stock or any other of its securities or any Equity Security, or altered
the term of any of its outstanding securities or made any change in its
outstanding shares of capital stock or its capitalization, whether by reason
of
reclassification, recapitalization, stock split, combination, exchange or
readjustment of shares, stock dividend or otherwise; changed its authorized
or
issued capital stock; granted any stock option or right to purchase shares
of
its capital stock; issued any security convertible into any of its capital
stock; granted any registration rights with respect to shares of its capital
stock; purchased, redeemed, retired, or otherwise acquired any shares of its
capital stock; declared or paid any dividend or other distribution or payment
in
respect of shares of capital stock of any other entity;
(g)
Dividends.
Declared, set aside, made or paid any dividend or other distribution to any
of
its shareholders;
(h)
Claims.
Released, waived or cancelled any claims or rights relating to or affecting
Zhongshan City Juxian Gas Oven Co., Ltd. in excess of $10,000 in the aggregate
or instituted or settled any Proceeding involving in excess of $10,000 in the
aggregate;
(i)
Discharged
Liabilities.
Paid,
discharged, cancelled, waived or satisfied any claim, obligation or liability
in
excess of $10,000 in the aggregate, except for liabilities incurred prior to
the
date of this Agreement in the Ordinary Course of Business;
(j)
Indebtedness.
Created, incurred, assumed or otherwise become liable for any Indebtedness
or
commit to any endeavor involving a commitment in excess of $10,000 in the
aggregate, other than contractual obligations incurred in the Ordinary Course
of
Business;
(k)
Guarantees.
Guaranteed or endorsed any obligation or net worth of any Person;
(l)
Acquisitions.
Acquired the capital stock or other securities or any ownership interest in,
or
substantially all of the assets of, any other Person;
(m)
Accounting.
Changed
its method of accounting or the accounting principles or practices utilized
in
the preparation of its financial statements, other than as required by GAAP;
(n)
Agreements.
Entered
into any agreement, or otherwise obligated it, to do any of the foregoing.
2.13
MATERIAL
CONTRACTS.
Zhongshan
City Juxian Gas Oven Co., Ltd. has delivered to Home System Group, prior to
the
date of this Agreement, true, correct and complete copies of each of its
Material Contracts.
(a)
No
Defaults. The Material Contracts of Zhongshan City Juxian Gas Oven Co., Ltd.
are
valid and binding agreements of Zhongshan City Juxian Gas Oven Co., Ltd., as
applicable, and are in full force and effect and are enforceable in accordance
with their terms. Except as would not have a Material Adverse Effect, Zhongshan
City Juxian Gas Oven Co., Ltd. is not in breach or default of any of its
Material Contracts to which it is a party and, to the knowledge of Zhongshan
City Juxian Gas Oven Co., Ltd., no other party to any of its Material Contracts
is in breach or default thereof. Except as would not have a Material Adverse
Effect, no event has occurred or circumstance has existed that (with or without
notice or lapse of time) would (a) contravene, conflict with or result in a
violation or breach of, or become a default or event of default under, any
provision of any of its Material Contracts or (b) permit Zhongshan City Juxian
Gas Oven Co., Ltd. or any other Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of,
or
to cancel, terminate or modify any of its Material Contracts. Zhongshan City
Juxian Gas Oven Co., Ltd. has not received any notice and has no knowledge
of
any pending or threatened cancellation, revocation or termination of any of
its
Material Contracts to which it is a party, and there are no renegotiations
of,
or attempts to renegotiate.
2.14
TAX
RETURNS AND AUDITS.
(a)
Tax
Returns. (a) All material Tax Returns required to be filed by or on behalf
of
Zhongshan City Juxian Gas Oven Co., Ltd. have been timely filed and all such
Tax
Returns were (at the time they were filed) and are true, correct and complete
in
all material respects; (b) all Taxes of Zhongshan City Juxian Gas Oven Co.,
Ltd.
required to have been paid (whether or not reflected on any Tax Return) have
been fully and timely paid,
(c)
no
waivers of statutes of limitation have been given or requested with respect
to
Zhongshan City Juxian Gas Oven Co., Ltd. in connection with any Tax Returns
covering Zhongshan City Juxian Gas Oven Co., Ltd. or with respect to any Taxes
payable by it; (d) no Governmental Body in a jurisdiction where Zhongshan City
Juxian Gas Oven Co., Ltd. does not file Tax Returns has made a claim, assertion
or threat to Zhongshan City Juxian Gas Oven Co., Ltd. that Zhongshan City Juxian
Gas Oven Co., Ltd. is or may be subject to taxation by such jurisdiction; (e)
Zhongshan City Juxian Gas Oven Co., Ltd. has duly and timely collected or
withheld, paid over and reported to the appropriate Governmental Body all
amounts required to be so collected or withheld for all periods under all
applicable laws; (f) there are no Liens with respect to Taxes on the property
or
assets of Zhongshan City Juxian Gas Oven Co., Ltd. other than Permitted Liens;
(g) there are no Tax rulings, requests for rulings, or closing agreements
relating to Zhongshan City Juxian Gas Oven Co., Ltd. for any period (or portion
of a period) that would affect any period after the date hereof; and (h) any
adjustment of Taxes of Zhongshan City Juxian Gas Oven Co., Ltd. made by a
Governmental Body in any examination that Zhongshan City Juxian Gas Oven Co.,
Ltd. is required to report to the appropriate provincial, local or foreign
taxing authorities has been reported, and any additional Taxes due with respect
thereto have been paid. No state of fact exists or has existed which would
constitute ground for the assessment of any tax liability by any Governmental
Body. All Tax Returns filed by Zhongshan City Juxian Gas Oven Co., Ltd. are
true, correct and complete.
(b)
No
Adjustments, Changes. Neither Zhongshan City Juxian Gas Oven Co., Ltd. nor
any
other Person on behalf of Zhongshan City Juxian Gas Oven Co., Ltd. (a) has
executed or entered into a closing agreement pursuant to Section 7121 of the
Code or any predecessor provision thereof or any similar provision of
provincial, local or foreign law; or (b) has agreed to or is required to make
any adjustments pursuant to Section 481(a) of the Code or any similar provision
of provincial, local or foreign law.
(c)
No
Disputes. There is no pending audit, examination, investigation, dispute,
proceeding or claim with respect to any Taxes of or Tax Return filed or required
to be filed by Zhongshan City Juxian Gas Oven Co., Ltd., nor is any such claim
or dispute pending or contemplated. Zhongshan City Juxian Gas Oven Co., Ltd.
has
made available to Home System Group true, correct and complete copies of all
Tax
Returns, examination reports and statements of deficiencies assessed or asserted
against or agreed to by Zhongshan City Juxian Gas Oven Co., Ltd. since January
1, 2004, and any and all correspondence with respect to the foregoing. Zhongshan
City Juxian Gas Oven Co., Ltd. does not have any outstanding closing agreement,
ruling request, requests for consent to change a method of accounting, subpoena
or request for information to or from a Governmental Body in connection with
any
Tax matter.
(d)
No
Tax Allocation, Sharing. Zhongshan City Juxian Gas Oven Co., Ltd. is not a
party
to any Tax allocation or sharing agreement. Other than with respect to the
Tax
Group of which Zhongshan City Juxian Gas Oven Co., Ltd. is the common parent,
Zhongshan City Juxian Gas Oven Co., Ltd. (a) has not been a member of a Tax
Group filing a consolidated income Tax Return under Section 1501 of the Code
(or
any similar provision of provincial, local or foreign law), and (b) do not
have
any liability for Taxes for any Person under Treasury Regulations Section
1.1502-6 (or any similar provision of provincial, local or foreign law) as
a
transferee or successor, by contract or otherwise.
2.15
MATERIAL
ASSETS.
The
financial statements of Zhongshan City Juxian Gas Oven Co., Ltd. reflect the
material properties and assets (real and personal) owned or leased by them.
2.16
INSURANCE
COVERAGE.
Zhongshan
City Juxian Gas Oven Co., Ltd. has made available to Home System Group, prior
to
the date of this Agreement, true, correct and complete copies of all insurance
and general liability policies maintained by Zhongshan City Juxian Gas Oven
Co.,
Ltd. on their properties and assets all claims made under any such current
or
prior insurance policies. All of such policies (a) taken together, provide
adequate insurance coverage for the properties, assets and operations of
Zhongshan City Juxian Gas Oven Co., Ltd. for all risks normally insured against
by a Person carrying on the same business as Zhongshan City Juxian Gas Oven
Co.,
Ltd., and (b) are sufficient for compliance with all applicable Laws and
Material Contracts of Zhongshan City Juxian Gas Oven Co., Ltd. All of such
policies are valid, outstanding and in full force and effect and, by their
express terms, will continue in full force and effect following the consummation
of the transactions contemplated by this Agreement. Except as set forth on
Schedule 2.16, Zhongshan City Juxian Gas Oven Co., Ltd. has not received and
has
no knowledge of (a) any refusal of coverage or any written notice that a defense
will be afforded with reservation of rights, or (b) any notice of cancellation
or any other indication in writing or otherwise that any insurance policy is
no
longer in full force or effect or will not be renewed or that the issuer of
any
policy is not willing or able to perform its obligations thereunder. All
premiums due on such insurance policies on or prior to the date hereof have
been
paid. There are no, and Zhongshan City Juxian Gas Oven Co., Ltd. and the
Shareholders have no knowledge of any circumstances or facts which, with or
without notice of lapse of time or both would lead to any: (i) pending or
threatened claims with respect to Zhongshan City Juxian Gas Oven Co., Ltd.
or
their properties or assets under any such insurance policies; (ii) claims as
to
which the insurers have notified Zhongshan City Juxian Gas Oven Co., Ltd. that
they intend to deny liability; and (iii) existing defaults on the part of
Zhongshan City Juxian Gas Oven Co., Ltd. under any such insurance policies.
2.17
LITIGATION;
ORDERS.
There
is
no Proceeding (whether federal, provincial, local or foreign) pending or, to
the
knowledge of Zhongshan City Juxian Gas Oven Co., Ltd., threatened or appealable
against or affecting Zhongshan City Juxian Gas Oven Co., Ltd. or any of its
properties, assets, business or employees. To the knowledge of Zhongshan City
Juxian Gas Oven Co., Ltd., there is no fact that might result in or form the
basis for any such Proceeding. Zhongshan City Juxian Gas Oven Co., Ltd. is
not
subject to any Orders and has not received any written opinion or memorandum
or
legal advice from their legal counsel to the effect that Zhongshan City Juxian
Gas Oven Co., Ltd. is exposed, from a legal standpoint, to any liability which
would be material to its business. Zhongshan City Juxian Gas Oven Co., Ltd.
is
not engaged in any legal action to recover monies due it or for damages
sustained by any of them.
2.18
LICENSES.
Except
as
would not have a Material Adverse Effect, Zhongshan City Juxian Gas Oven Co.,
Ltd. possesses from the appropriate Governmental Body all licenses, permits,
authorizations, approvals, franchises and rights that are necessary for it
to
engage in its business as currently conducted and to permit it to own and use
its properties and assets in the manner in which it currently owns and uses
such
properties and assets (collectively, “Permits”).
Except as would not have a Material Adverse Effect on Zhongshan City Juxian
Gas
Oven Co., Ltd., Zhongshan City Juxian Gas Oven Co., Ltd. has not received any
written notice from any Governmental Body or other Person that there is lacking
any license, permit, authorization, approval, franchise or right necessary
for
Zhongshan City Juxian Gas Oven Co., Ltd. to engage in its business as currently
conducted and to permit Zhongshan City Juxian Gas Oven Co., Ltd. to own and
use
its properties and assets in the manner in which it currently owns and uses
such
properties and assets. Except as would not have a Material Adverse Effect on
Zhongshan City Juxian Gas Oven Co., Ltd., the Permits are valid and in full
force and effect. Except as would not have a Material Adverse Effect on
Zhongshan City Juxian Gas Oven Co., Ltd., no event has occurred or circumstance
exists that may (with or without notice or lapse of time): (a) constitute or
result, directly or indirectly, in a violation of or a failure to comply with
any Permit; or (b) result, directly or indirectly, in the revocation,
withdrawal, suspension, cancellation or termination of, or any modification
to,
any Permit. Neither Zhongshan City Juxian Gas Oven Co., Ltd. nor the
Shareholders has received any written notice from any Governmental Body or
any
other Person regarding: (a) any actual, alleged, possible or potential
contravention of any Permit; or (b) any actual, proposed, possible or potential
revocation, withdrawal, suspension, cancellation, termination of, or
modification to, any Permit. All applications required to have been filed for
the renewal of such Permits have been duly filed on a timely basis with the
appropriate Persons, and all other filings required to have been made with
respect to such Permits have been duly made on a timely basis with the
appropriate Persons. All Permits are renewable by their terms or in the Ordinary
Course of Business without the need to comply with any special qualification
procedures or to pay any amounts other than routine fees or similar charges,
all
of which have, to the extent due, been duly paid.
2.19
INTERESTED
PARTY TRANSACTIONS.
No
officer, director or shareholder of Zhongshan City Juxian Gas Oven Co., Ltd.
or
any Affiliate, Related Person or “associate” (as such term is defined in Rule
405 of the Commission under the Securities Act) of any such Person, either
directly or indirectly, (1) has an interest in any Person which (a) furnishes
or
sells services or products which are furnished or sold or are proposed to be
furnished or sold by Zhongshan City Juxian Gas Oven Co., Ltd., or (b) purchases
from or sells or furnishes to, or proposes to purchase from, sell to or furnish
Zhongshan City Juxian Gas Oven Co., Ltd. any goods or services; (2) has a
beneficial interest in any contract or agreement to which Zhongshan City Juxian
Gas Oven Co., Ltd. is a party or by which it may be bound or affected; or (3)
is
a party to any material agreements, contracts or commitments in effect as of
the
date hereof with Zhongshan City Juxian Gas Oven Co., Ltd. “Related
Person”
means:
(i) with respect to a particular individual, the individual’s immediate family
which shall include the individual’s spouse, parents, children, siblings,
mothers and fathers-in-law, sons and daughters-in-law, and brothers and
sisters-in-law; and (ii) with respect to a specified individual or entity,
any
entity or individual that, directly or indirectly, controls, is controlled
by,
or is under common control with such specified entity or individual.
2.20
GOVERNMENTAL
INQUIRIES.
Zhongshan
City Juxian Gas Oven Co., Ltd. has made available to Home System Group a copy
of
each material written inspection report, questionnaire, inquiry, demand or
request for information received by Zhongshan City Juxian Gas Oven Co., Ltd.
from (and the response of Zhongshan City Juxian Gas Oven Co., Ltd. thereto),
and
each material written statement, report or other document filed by Zhongshan
City Juxian Gas Oven Co., Ltd. with, any Governmental Body since January 1,
2003.
2.21
INTELLECTUAL
PROPERTY.
Any
Intellectual Property Zhongshan City Juxian Gas Oven Co., Ltd. uses in its
business as presently conducted is owned by Zhongshan City Juxian Gas Oven
Co.,
Ltd. or properly licensed.
2.22
STOCK
OPTION PLANS; EMPLOYEE BENEFITS.
(a)
Zhongshan City Juxian Gas Oven Co., Ltd. does not have any employee benefit
plans or arrangements covering their present and former employees or providing
benefits to such persons in respect of services provided to Zhongshan City
Juxian Gas Oven Co., Ltd. Zhongshan City Juxian Gas Oven Co., Ltd. has no
commitment, whether formal or informal and whether legally binding or not,
to
create any additional plan, arrangement or practice similar to the Approved
Plans.
(b)
The
consummation of the transactions contemplated hereby will not result in (i)
any
payment (including, without limitation, severance, unemployment compensation
or
bonus payments) becoming due from Zhongshan City Juxian Gas Oven Co., Ltd.
or
due to any Person, (ii) any increase in the amount of compensation or benefits
payable to any Person or (iii) any acceleration of the vesting or timing of
payment of any compensation, award or determination of options, warrants,
rights, severance payments or other contingent obligations of any nature
whatsoever of Zhongshan City Juxian Gas Oven Co., Ltd. in favor of any Person.
No agreement, arrangement or other contract of Zhongshan City Juxian Gas Oven
Co., Ltd. provides benefits or payments contingent upon, triggered by, or
increased as a result of a change in the ownership or effective control of
Zhongshan City Juxian Gas Oven Co., Ltd.
(c)
Zhongshan City Juxian Gas Oven Co., Ltd. is not a party to or bound by any
written or oral agreement or understanding to employ, subsequent to the Closing,
any of its respective present or former directors, officers, independent
contractors, consultants, agents or employees.
2.24
EMPLOYEE
MATTERS.
(a)
No
former or current employee of Zhongshan City Juxian Gas Oven Co., Ltd. is a
party to, or is otherwise bound by, any agreement or arrangement (including,
without limitation, any confidentiality, non-competition or proprietary rights
agreement) that in any way adversely affected, affects, or will affect (i)
the
performance of his, her or its duties to Zhongshan City Juxian Gas Oven Co.,
Ltd., or (ii) the ability of Zhongshan City Juxian Gas Oven Co., Ltd. to conduct
its business.
(b)
None
of Zhongshan City Juxian Gas Oven Co., Ltd. has employees, directors, officers,
consultants, independent contractors, representatives or agents whose contract
of employment or engagement cannot be terminated by three months’ notice.
(c)
Zhongshan City Juxian Gas Oven Co., Ltd. is not required or obligated to pay,
and since January 01, 2006,
have not
paid any moneys other than in respect of remuneration, pension or other
benefits, to or for the benefit of, any director, officer, employee, consultant,
independent contractor, representative or agent of Zhongshan City Juxian Gas
Oven Co., Ltd.
(d)
Zhongshan City Juxian Gas Oven Co., Ltd. is in compliance with all applicable
laws respecting employment and employment practices, terms and conditions or
employment and wages and hours, and is not engaged in any unfair labor practice.
There is no labor strike, dispute, shutdown or stoppage actually pending or,
to
the knowledge of Zhongshan City Juxian Gas Oven Co., Ltd. or the Shareholders,
threatened against or affecting Zhongshan City Juxian Gas Oven Co.,
Ltd.
2.25
ENVIRONMENTAL
AND SAFETY MATTERS.
Except
as
would not have a Material Adverse Effect on Zhongshan City Juxian Gas Oven
Co.,
Ltd.:
(a)
Zhongshan City Juxian Gas Oven Co., Ltd. has at all time been and is in
compliance with all Environmental Laws and Orders applicable to Zhongshan City
Juxian Gas Oven Co., Ltd.
(b)
There
are no Proceedings pending or, to the knowledge of Zhongshan City Juxian Gas
Oven Co., Ltd., threatened against Zhongshan City Juxian Gas Oven Co., Ltd.
or
any of the Shareholders alleging the violation of any Environmental Law or
Environmental Permit applicable to Zhongshan City Juxian Gas Oven Co., Ltd.
or
alleging that Zhongshan City Juxian Gas Oven Co., Ltd. is a potentially
responsible party for any environmental site contamination. None of Zhongshan
City Juxian Gas Oven Co., Ltd. or the Shareholders are aware of, or has ever
received notice of, any past, present or future events, conditions,
circumstances, activities, practices, incidents, actions or plans which may
interfere with or prevent continued compliance, or which may give rise to any
common law or legal liability, or otherwise form the basis of any claim, action,
suit, proceeding, hearing or investigation, based on or related to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling, or the emission, discharge, release or threatened
release into the environment, of any pollutant, contaminant, or hazardous or
toxic material or waste.
(c)
Neither this Agreement nor the consummation of the transactions contemplated
by
this Agreement shall impose any obligations to notify or obtain the consent
of
any Governmental Body or third Persons under any Environmental Laws applicable
to Zhongshan City Juxian Gas Oven Co., Ltd.
2.26
MONEY
LAUNDERING LAWS.
The
operations of Zhongshan City Juxian Gas Oven Co., Ltd. are and have been
conducted at all times in compliance with applicable financial record-keeping
and reporting requirements of the money laundering statutes of all U.S. and
non-U.S. jurisdictions, the rules and regulations thereunder and any related
or
similar rules, regulations or guidelines, issued, administered or enforced
by
any Governmental Body (collectively, the “Money
Laundering Laws”)
and no
Proceeding involving Zhongshan City Juxian Gas Oven Co., Ltd. or any of the
Shareholders with respect to the Money Laundering Laws is pending or, to the
knowledge of Zhongshan City Juxian Gas Oven Co., Ltd. or any of the
Shareholders, threatened.
2.27
DISCLOSURE.
(a)
No
statement, representation or warranty of Zhongshan City Juxian Gas Oven Co.,
Ltd. or the Shareholders in this Agreement (taken with the Schedules) or the
Transaction Agreements or any exhibits or schedules thereto contain any untrue
statement of a material fact or omits to state a material fact necessary to
make
the statements herein or therein, taken as a whole, in light of the
circumstances in which they were made, not misleading.
(b)
In
the event of any inconsistency between the statements in the body of this
Agreement and those in the Schedules (other than an exception expressly set
forth as such in the Schedules with respect to a specifically identified
representation or warranty), the statements in the Schedules shall control.
(c)
The
books of account, minute books and stock record books of Zhongshan City Juxian
Gas Oven Co., Ltd., all of which have been made available to Home System Group,
are complete and accurate and have been maintained in accordance with sound
business practices. Without limiting the generality of the foregoing, the minute
books of Zhongshan City Juxian Gas Oven Co., Ltd. contain complete and accurate
records of all meetings held, and corporate action taken, by the shareholders,
the boards of directors, and committees of the boards of directors of Zhongshan
City Juxian Gas Oven Co., Ltd., as applicable, and no meeting of any such
shareholders, board of directors, or committee has been held for which minutes
have not been prepared and are not contained in such minute books.
2.28
FINDERS
AND BROKERS.
(a)
None
of Zhongshan City Juxian Gas Oven Co., Ltd., the Shareholders or any Person
acting on behalf of Zhongshan City Juxian Gas Oven Co., Ltd. or the Shareholders
has engaged any finder, broker, intermediary or any similar Person in connection
with the Exchange.
(b)
None
of Zhongshan City Juxian Gas Oven Co., Ltd., the Shareholders nor any Person
acting on behalf of Zhongshan City Juxian Gas Oven Co., Ltd. or the Shareholders
has entered into a contract or other agreement that provides that a fee shall
be
paid to any Person or Entity if the Exchange is consummated.
2.29 SHAREHOLDER
REPRESENTATIONS.
Each of
the Shareholders represents and warrants as follows:
(a)
as of
the date of this Agreement each of the Shareholders was, and at the Closing
Date
it is, an “accredited investor” as defined in Rule 501(a) under the Securities
Act. Each Shareholder is not a registered broker-dealer under Section 15 of
the
Exchange Act.
(b)
each
of the Shareholders are knowledgeable and experienced in finance and business
matters and thus they are able to evaluate the risks and merits of acquiring
the
Acquisition Shares;
(c)
each
of the Shareholders are able to bear the economic risk of purchasing the
Acquisition Shares;
(d)
Home
System Group has provided the Shareholders with access to the type of
information normally provided in a prospectus;
(e)
Home
System Group did not use any form of public solicitation or general advertising
in connection with the issuance of the Acquisition Shares;
(f)
as to
the Shareholders, the offer of such securities was not made to a person in
the
United States and either (i) at the time the buy order was originated, each
of
the Shareholders was outside the United States (in China), or Home System Group
and any person acting on its behalf reasonably believed that each Shareholder
was outside the United States, or (ii) the transaction was not executed on
or
through the facilities of the Over the Counter Bulletin Board and neither Home
System Group nor any person acting on its behalf knows that the transaction
has
been prearranged with a person in the United States;
(g)
the
transactions contemplated hereby are bona fide and not for the purpose of
“washing off’ the resale restrictions imposed because the securities are
“restricted securities” (as that term is defined in Rule 144(a)(3) under the
0000 Xxx);
(h)
each
of the Shareholders understands and acknowledges that none of the Acquisition
Shares has been registered under the Securities Act. Each Shareholder is
acquiring the Acquisition Shares as principal for its own account and not with
a
view to or for distributing or reselling such securities or any part thereof,
without prejudice, however, to such Shareholder's right, subject to the
provisions of this Agreement, at all times to sell or otherwise dispose of
all
or any part of such securities pursuant to an effective registration statement
under the Securities Act or under an exemption from such registration and in
compliance with applicable federal and state securities laws. Nothing contained
herein shall be deemed a representation or warranty by such Shareholder to
hold
the securities for any period of time. Such Shareholder is acquiring the
Acquisition Shares hereunder in the ordinary course of its business. Such
Shareholder does not have any agreement or understanding, directly or
indirectly, with any Person to distribute any of the Acquisition Shares.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF HOME
SYSTEM GROUP
Home
System Group hereby represents and warrants to the Shareholders as of the date
hereof:
3.1
ORGANIZATION;
GOOD STANDING.
Home
System Group is duly incorporated, validly and in good standing existing under
the laws of Nevada, has all requisite authority and power (corporate and other),
governmental licenses, authorizations, consents and approvals to carry on its
business as presently conducted and as contemplated to be conducted, to own,
hold and operate its properties and assets as now owned, held and operated
by
it, to enter into this Agreement, to carry out the provisions hereof except
where the failure to be in good standing or to have such governmental licenses,
authorizations, consents and approvals will not, in the aggregate, either (i)
have a Material Adverse Effect on the business, assets or financial condition
of
Home System Group, or (ii) impair the ability of Home System Group to perform
its material obligations under this Agreement. Home System Group is duly
qualified, licensed or domesticated as a foreign corporation in good standing
in
each jurisdiction wherein the nature of its activities or its properties owned
or leased requires such qualification, licensing or domestication, except where
the failure to be so qualified, licensed or domesticated will not have a
Material Adverse Effect on Home System Group.
3.2
HOME
SYSTEM GROUP COMMON STOCK.
As
of
April
12,
2007,
there
were 62,297,949 shares of Home System Group’s common stock issued and
outstanding. The Acquisition Shares, when issued in connection with this
Agreement and the other Transactional Agreements, will be duly authorized,
validly issued, fully paid and nonassessable.
3.3
AUTHORITY;
BINDING NATURE OF AGREEMENTS.
(a)
The
execution, delivery and performance of this Agreement, the Transactional
Agreements, and all other agreements and instruments contemplated to be executed
and delivered by Home System Group in connection herewith have been duly
authorized by all necessary corporate action on the part of Home System Group
and its board of directors.
(b)
This
Agreement, the Transactional Agreements, and all other agreements and
instruments contemplated to be executed and delivered by Home System Group
constitute the legal, valid and binding obligation of Home System Group,
enforceable against Home System Group in accordance with their terms, except
to
the extent that enforceability may be limited by applicable bankruptcy,
Exchange, insolvency, moratorium or other laws affecting the enforcement of
creditors’ rights generally and by general principles of equity regardless of
whether such enforceability is considered in a proceeding in law or equity.
(c)
There
is no pending Proceeding, and, to Home System Group’s knowledge, no Person has
threatened to commence any Proceeding that challenges, or that may have the
effect of preventing, delaying, making illegal or otherwise interfering with,
the Exchange or Home System Group’s ability to comply with or perform its
obligations and covenants under the Transactional Agreements, and, to the
knowledge of Home System Group, no event has occurred, and no claim, dispute
or
other condition or circumstance exists, that might directly or indirectly give
rise to or serve as a basis for the commencement of any such Proceeding.
3.4
NON-CONTRAVENTION;
CONSENTS.
The
execution and delivery of this Agreement and the other Transactional Agreements,
and the consummation of the Exchange, by Home System Group will not, directly
or
indirectly (with or without notice or lapse of time):
(a)
contravene, conflict with or result in a material violation of (i) Home System
Group’s Articles of Incorporation or Bylaws, or (ii) any resolution adopted by
Home System Group Board or any committee thereof or the stockholders of Home
System Group;
(b)
to
the knowledge of Home System Group, contravene, conflict with or result in
a
material violation of, or give any Governmental Body the right to challenge
the
Exchange or to exercise any remedy or obtain any relief under, any legal
requirement or any Order to which Home System Group or any material assets
owned
or used by it are subject;
(c)
to
the knowledge of Home System Group, cause any material assets owned or used
by
Home System Group to be reassessed or revalued by any taxing authority or other
Governmental Body;
(d)
to
the knowledge of Home System Group, contravene, conflict with or result in
a
material violation of any of the terms or requirements of, or give any
Governmental Body the right to revoke, withdraw, suspend, cancel, terminate
or
modify, any Governmental Authorization that is held by Home System Group or
that
otherwise relates to Home System Group’s business or to any of the material
assets owned or used by Home System Group, where such contraventions, conflict,
violation, revocation, withdrawal, suspension, cancellation, termination or
modification would have a Material Adverse Effect on Home System Group;
(e)
contravene, conflict with or result in a material violation or material breach
of, or material default under, any Contract to which Home System Group is a
party;
(f)
give
any Person the right to any payment by Home System Group or give rise to any
acceleration or change in the award, grant, vesting or determination of options,
warrants, rights, severance payments or other contingent obligations of any
nature whatsoever of Home System Group in favor of any Person, in any such
case
as a result of the Exchange; or
(g)
result in the imposition or creation of any material Lien upon or with respect
to any material asset owned or used by Home System Group.
Except
for Consents, filings or notices required under the state and federal securities
laws or any other laws or regulations or as otherwise contemplated in this
Agreement and the other Transactional Agreements, Home System Group will not
be
required to make any filing with or give any notice to, or obtain any Consent
from, any Person in connection with the execution and delivery of this Agreement
and the other Transactional Agreements or the consummation or performance of
the
Exchange.
3.5
FINDERS
AND BROKERS.
(a)
Neither Home System Group nor any Person acting on behalf of Home System Group
has engaged any finder, broker, intermediary or any similar Person in connection
with the Exchange.
(b)
Home
System Group has not entered into a contract or other agreement that provides
that a fee shall be paid to any Person or Entity if the Exchange is consummated.
3.6
REPORTS
AND FINANCIAL STATEMENTS; ABSENCE OF CERTAIN CHANGES.
(a)
Home
System Group has filed all reports required to be filed with the SEC pursuant
to
the Exchange Act since January 1, 2007 (all such reports, including those to
be
filed prior to the Closing Date and all registration statements and prospectuses
filed by Home System Group with the SEC, are collectively referred to as the
“Home
System Group SEC Reports”).
All of
the Home System Group SEC Reports, as of their respective dates of filing (or
if
amended or superseded by a filing prior to the date of this Agreement, then
on
the date of such filing): (i) complied in all material respects as to form
with
the applicable requirements of the Securities Act or Exchange Act and the rules
and regulations thereunder, as the case may be, and (ii) did not contain any
untrue statement of a material fact or omit to state a material fact required
to
be stated therein or necessary in order to make the statements therein, in
light
of the circumstances under which they were made, not misleading. To the
knowledge of Home System Group, the audited financial statements of Home System
Group included in the Home System Group SEC Reports comply in all material
respects with the published rules and regulations of the SEC with respect
thereto, and such audited financial statements (i) were prepared from the books
and records of Home System Group, (ii) were prepared in accordance with GAAP
applied on a consistent basis (except as may be indicated therein or in the
notes or schedules thereto), and (iii) present fairly the financial position
of
Home System Group as of the dates thereof and the results of operations and
cash
flows for the periods then ended. To the knowledge of Home System Group, the
unaudited financial statements included in the Home System Group SEC Reports
comply in all material respects with the published rules and regulations of
the
SEC with respect thereto; and such unaudited financial statements (i) were
prepared from the books and records of Home System Group, (ii) were prepared
in
accordance with GAAP, except as otherwise permitted under the Exchange Act
and
the rules and regulations thereunder, on a consistent basis (except as may
be
indicated therein or in the notes or schedules thereto), and (iii) present
fairly the financial position of Home System Group as of the dates thereof
and
the results of operations and cash flows (or changes in financial condition)
for
the periods then ended, subject to normal year-end adjustments and any other
adjustments described therein or in the notes or schedules thereto.
(b)
Except as specifically contemplated by this Agreement or reflected in the Home
System Group SEC Reports, since January 1, 2007, there has not been (i) any
material adverse change in Home System Group’s business, assets, liabilities,
operations, and, to the knowledge of Home System Group, no event has occurred
that is likely to have a material adverse effect on Home System Group’s
business, assets, liabilities or operations, (ii) any declarations setting
aside
or payment of any dividend or distribution with respect to the Home System
Group
Common Stock other than consistent with past practices, (iii) any material
change in Home System Group’s accounting principles, procedures or methods, (iv)
cancellation in writing of any material customer contract or (v) the loss of
any
customer relationship which would have a material adverse effect on Home System
Group’s business, assets, liabilities or operations.
3.7
COMPLIANCE
WITH APPLICABLE LAW.
Except
as
disclosed in the Home System Group SEC Reports filed prior to the date of this
Agreement and except to the extent that the failure or violation would not
in
the aggregate have a Material Adverse Effect on the business, results of
operations or financial condition of Home System Group, to Home System Group’s
knowledge Home System Group holds all Governmental Authorizations necessary
for
the lawful conduct of its business under and pursuant to, and the business
of
Home System Group is not being conducted in violation of, any Governmental
Authorization applicable to Home System Group.
3.8
COMPLETE
COPIES OF REQUESTED REPORTS.
Home
System Group has delivered or made available true and complete copies of each
document that has been reasonably requested by Zhongshan City Juxian Gas Oven
Co., Ltd. or the Shareholders.
3.9
FULL
DISCLOSURE.
(a)
Neither this Agreement (including all Schedules and Exhibits hereto) nor any
of
the Transactional Agreements contemplated to be executed and delivered by Home
System Group in connection with this Agreement contains any untrue statement
of
material fact; and none of such documents omits to state any material fact
necessary to make any of the representations, warranties or other statements
or
information contained therein not misleading.
(b)
All
of the information set forth in the prospectus and all other information
regarding Home System Group and the business, condition, assets, liabilities,
operations, financial performance, net income and prospects of either that
has
been furnished to Zhongshan City Juxian Gas Oven Co., Ltd. or the Shareholders
by or on behalf of Home System Group, is accurate and complete in all material
respects.
ARTICLE
IV
COVENANTS
OF ZHONGSHAN CITY JUXIAN GAS OVEN CO., LTD.
4.1
ACCESS
AND INVESTIGATION.
Each
of
Zhongshan City Juxian Gas Oven Co., Ltd., the Shareholders and their
Representatives, shall ensure that, at all times during the Pre-Closing Period:
(a)
Zhongshan City Juxian Gas Oven Co., Ltd. and their Representatives provide
Home
System Group and its Representatives access, at reasonable times and with
twenty-four (24) hours notice from Home System Group to Zhongshan City Juxian
Gas Oven Co., Ltd. , to all of the premises and assets of Zhongshan City Juxian
Gas Oven Co., Ltd. , to all existing books, records, Tax Returns, work papers
and other documents and information relating to Zhongshan City Juxian Gas Oven
Co., Ltd. , and to responsible officers and employees of Zhongshan City Juxian
Gas Oven Co., Ltd., and Zhongshan City Juxian Gas Oven Co., Ltd. and its
Representatives provide Home System Group and its Representatives with copies
of
such existing books, records, Tax Returns, work papers and other documents
and
information relating to Zhongshan City Juxian Gas Oven Co., Ltd. as Home System
Group may request in good faith;
(b)
Each
of Zhongshan City Juxian Gas Oven Co., Ltd. and their Representatives confer
regularly with Home System Group upon its request, concerning operational
matters and otherwise report regularly (not less than semi-monthly and as Home
System Group may otherwise request) to Home System Group and discuss with Home
System Group and its Representatives concerning the status of the business,
condition, assets, liabilities, operations, and financial performance of
Zhongshan City Juxian Gas Oven Co., Ltd., and promptly notify Home System Group
of any material change in the business, condition, assets, liabilities,
operations, and financial performance of Zhongshan City Juxian Gas Oven Co.,
Ltd. , or any event reasonably likely to lead to any such change.
4.2
OPERATION
OF BUSINESS.
Each
of
Zhongshan City Juxian Gas Oven Co., Ltd. and the Shareholders shall ensure
that,
during the Pre-Closing Period:
(a)
It
conducts its operations in the Ordinary Course of Business and in the same
manner as such operations have been conducted prior to the date of this
Agreement;
(b)
It
uses its commercially reasonable efforts to preserve intact its current business
organization, keep available and not terminate the services of its current
officers and employees and maintain its relations and goodwill with all
suppliers, customers, landlords, creditors, licensors, licensees, employees
and
other Persons having business relationships with Zhongshan City Juxian Gas
Oven
Co., Ltd.;
(c)
It
does not declare, accrue, set aside or pay any dividend or make any other
distribution in respect of any shares of its capital stock, and does not
repurchase, redeem or otherwise reacquire any shares of its capital stock or
other securities, except with respect to the repurchase of shares of Zhongshan
City Juxian Gas Oven Co., Ltd. Common Stock upon termination of employees at
the
original purchase price pursuant to agreements existing at the date hereof;
(d)
It
does not sell or otherwise issue (or grant any warrants, options or other rights
to purchase) any shares of capital stock or any other securities, except the
issuance of shares of Zhongshan City Juxian Gas Oven Co., Ltd. Common Stock
pursuant to option grants to employees made under the Option Plan in the
Ordinary Course of Business;
(e)
It
does not amend its Articles of Incorporation, Bylaws or other Organizational
Documents, and does not effect or become a party to any recapitalization,
reclassification of shares, stock split, reverse stock split or similar
transaction;
(f)
It
does not form any subsidiary or acquire any equity interest or other interest
in
any other Entity;
(g)
It
does not establish or adopt any Employee Benefit Plan, and does not pay any
bonus or make any profit sharing or similar payment to, or increase the amount
of the wages, salary, commissions, fringe benefits or other compensation or
remuneration payable to, any of its directors, officers or employees;
(h)
It
does not change any of its methods of accounting or accounting practices in
any
respect;
(i)
It
does not make any Tax election;
(j)
It
does not commence or take any action or fail to take any action which would
result in the commencement of any Proceeding;
(k)
It
does not (i) acquire, dispose of, transfer, lease, license, mortgage, pledge
or
encumber any fixed or other assets, other than in the Ordinary Course of
Business; (ii) incur, assume or prepay any indebtedness, Indebtedness or
obligation or any other liabilities or issue any debt securities, other than
in
the Ordinary Course of Business; (iii) assume, guarantee, endorse for the
obligations of any other person, other than in the Ordinary Course of Business;
(iv) make any loans, advances or capital contributions to, or investments in,
any other Person, other than in the Ordinary Course of Business; or (v) fail
to
maintain insurance consistent with past practices for its business and property;
(l)
It
pays all debts and Taxes, files all of its Tax Returns (as provided herein)
and
pays or performs all other obligations, when due;
(m)
It
does not enter into or amend any agreements pursuant to which any other Person
is granted distribution, marketing or other rights of any type or scope with
respect to any of its services, products or technology;
(n)
It
does not hire any new officer-level employee;
(o)
It
does not revalue any of its assets, including, without limitation, writing
down
the value of inventory or writing off notes or accounts receivable, except
as
required under GAAP and in the Ordinary Course of Business;
(p)
Except as otherwise contemplated hereunder, it does not enter into any
transaction or take any other action outside the Ordinary Course of Business;
and
(q)
It
does not enter into any transaction or take any other action that likely would
cause or constitute a Breach of any representation or warranty made by it in
this Agreement.
4.3
FILINGS
AND CONSENTS; COOPERATION.
Each
of
Zhongshan City Juxian Gas Oven Co., Ltd. and the Shareholders shall ensure
that:
(a)
Each
filing or notice required to be made or given (pursuant to any applicable Law,
Order or contract, or otherwise) by Zhongshan City Juxian Gas Oven Co., Ltd.
or
the Shareholders in connection with the execution and delivery of any of the
Transactional Agreements, or in connection with the consummation or performance
of the Exchange, is made or given as soon as possible after the date of this
Agreement;
(b)
Each
Consent required to be obtained (pursuant to any applicable Law, Order or
contract, or otherwise) by Zhongshan City Juxian Gas Oven Co., Ltd. or the
Shareholders in connection with the execution and delivery of any of the
Transactional Agreements, or in connection with the consummation or performance
of the Exchange, is obtained as soon as possible after the date of this
Agreement and remains in full force and effect through the Closing Date;
(c)
It
promptly delivers to Home System Group a copy of each filing made, each notice
given and each Consent obtained by Zhongshan City Juxian Gas Oven Co., Ltd.
during the Pre-Closing Period; and
(d)
During the Pre-Closing Period, it and its Representatives cooperate with Home
System Group and Home System Group’s Representatives, and prepare and make
available such documents and take such other actions as Home System Group may
request in good faith, in connection with any filing, notice or Consent that
Home System Group is required or elects to make, give or obtain.
4.4
COMMERCIALLY
REASONABLE EFFORTS
During
the Pre-Closing Period, each of Zhongshan City Juxian Gas Oven Co., Ltd. and
the
Shareholders shall use its commercially reasonable efforts to cause the
conditions set forth in Article VI and Article VII to be satisfied on a timely
basis and so that the Closing can take place on or before
June 30,
2007,
in
accordance with Section 1.5, and shall not take any action or omit to take
any
action, the taking or omission of which would or could reasonably be expected
to
result in any of the representations and warranties of Zhongshan City Juxian
Gas
Oven Co., Ltd. and the Shareholders set forth in this Agreement becoming untrue,
or in any of the conditions of Closing set forth in Article VI or Article VII
not being satisfied.
4.5
CONFIDENTIALITY;
PUBLICITY.
Each
of
Zhongshan City Juxian Gas Oven Co., Ltd. and the Shareholders shall ensure
that:
(a)
It
and its Representatives keep strictly confidential the existence and terms
of
this Agreement prior to the issuance or dissemination of any mutually agreed
upon press release or other disclosure of the Exchange; and
(b)
neither it nor any of its Representatives issues or disseminates any press
release or other publicity or otherwise makes any disclosure of any nature
(to
any of its suppliers, customers, landlords, creditors or employees or to any
other Person) regarding any of the Exchange; except in each case to the extent
that it is required by law to make any such disclosure regarding such
transactions or as separately agreed by the parties; provided, however, that
if
it is required by law to make any such disclosure, Zhongshan City Juxian Gas
Oven Co., Ltd. advises Home System Group, at least five business days before
making such disclosure, of the nature and content of the intended disclosure.
ARTICLE
V.
COVENANTS
OF HOME SYSTEM GROUP
5.1
NOTIFICATION.
During
the Pre-Closing Period, Home System Group shall promptly notify Zhongshan City
Juxian Gas Oven Co., Ltd. in writing of:
(a)
the
discovery by Home System Group of any event, condition, fact or circumstance
that occurred or existed on or prior to the date of this Agreement which is
contrary to any representation or warranty made by Home System Group in this
Agreement; and,
(b)
any
event, condition, fact or circumstance that occurs, arises or exists after
the
date of this Agreement (except as a result of actions taken pursuant to the
written consent of Zhongshan City Juxian Gas Oven Co., Ltd.) and that is
contrary to any representation or warranty made by Home System Group in this
Agreement;
5.2
FILINGS
AND CONSENTS; COOPERATION.
Home
System Group shall ensure that:
(a)
Each
filing or notice required to be made or given (pursuant to any applicable Law,
Order or contract, or otherwise) by Home System Group in connection with the
execution and delivery of any of the Transactional Agreements, or in connection
with the consummation or performance of the Exchange, is made or given as soon
as possible after the date of this Agreement;
(b)
Each
Consent required to be obtained (pursuant to any applicable Law, Order or
contract, or otherwise) by Home System Group in connection with the execution
and delivery of any of the Transactional Agreements, or in connection with
the
consummation or performance of the Exchange, is obtained as soon as possible
after the date of this Agreement and remains in full force and effect through
the Closing Date;
(c)
Home
System Group promptly delivers to Zhongshan City Juxian Gas Oven Co., Ltd.
a
copy of each filing made, each notice given and each Consent obtained by Home
System Group during the Pre-Closing Period; and
(d)
During the Pre-Closing Period, Home System Group and its Representatives
cooperate with Zhongshan City Juxian Gas Oven Co., Ltd. and its Representatives,
and prepare and make available such documents and take such other actions as
Zhongshan City Juxian Gas Oven Co., Ltd. may request in good faith, in
connection with any filing, notice or Consent that Zhongshan City Juxian Gas
Oven Co., Ltd. is required or elects to make, give or obtain.
5.3
COMMERCIALLY
REASONABLE EFFORTS.
During
the Pre-Closing Period, Home System Group shall use its commercially reasonable
efforts to cause the conditions set forth in Article VI and Article VII to
be
satisfied on a timely basis and so that the Closing can take place on or
before June
30,
2007, or
as
soon thereafter as is reasonably practical, in accordance with Section 1.5,
and
shall not take any action or omit to take any action, the taking or omission
of
which would or could reasonably be expected to result in any of the
representations and warranties or Home System Group set forth in this Agreement
becoming untrue or in any of the conditions of closing set forth in Article
VI
or Article VII not being satisfied.
5.4 DISCLOSURE
OF CONFIDENTIAL INFORMATION.
(a)
Each
of Home System Group, Zhongshan City Juxian Gas Oven Co., Ltd. and the
Shareholders acknowledges and agrees that it may receive Confidential
Information in connection with this Transaction including without limitation,
any information disclosed during the due diligence process, the public
disclosure of which will harm the disclosing party’s business. The Receiving
Party may use Confidential Information only in connection with the Transaction.
The results of the due diligence review may not be used for any other purpose
other than in connection with the Transaction. Except as expressly provided
in
this Agreement, the Receiving Party shall not disclose Confidential Information
to anyone without the Disclosing Party’s prior written consent. The Receiving
Party shall take all reasonable measures to avoid disclosure, dissemination
or
unauthorized use of Confidential Information, including, at a minimum, those
measures it takes to protect its own confidential information of a similar
nature. The Receiving Party shall not export any Confidential Information in
any
manner contrary to the export regulations of the governmental jurisdiction
to
which it is subject.
(b)
The
Receiving Party may disclose Confidential Information as required to comply
with
binding orders of governmental entities that have jurisdiction over it, provided
that the Receiving Party (i) gives the Disclosing Party reasonable notice (to
the extent permitted by law) to allow the Disclosing Party to seek a protective
order or other appropriate remedy, (ii) discloses only such information as
is
required by the governmental entity, and (iii) uses commercially reasonable
efforts to obtain confidential treatment for any Confidential Information so
disclosed.
(c)
All
Confidential Information shall remain the exclusive property of the Disclosing
Party. The Disclosing Party’s disclosure of Confidential Information shall not
constitute an express or implied grant to the Receiving Party of any rights
to
or under the Disclosing Party’s patents, copyrights, trade secrets, trademarks
or other intellectual property rights.
(d)
The
Receiving Party shall notify the Disclosing Party immediately upon discovery
of
any unauthorized use or disclosure of Confidential Information or any other
breach of this Agreement by the Receiving Party. The Receiving Party shall
cooperate with the Disclosing Party in every reasonable way to help the
Disclosing Party regain possession of such Confidential Information and prevent
its further unauthorized use.
(e)
The
Receiving Party shall return or destroy all tangible materials embodying
Confidential Information (in any form and including, without limitation, all
summaries, copies and excerpts of Confidential Information) promptly following
the Disclosing Party’s written request; provided, however, that, subject to the
provisions of this Agreement, the Receiving Party may retain one copy of such
materials in the confidential, restricted access files of its legal department
for use only in the event a dispute arises between the parties related to the
Transaction and only in connection with that dispute. At the Disclosing Party’s
option, the Receiving Party shall provide written certification of its
compliance with this Section.
5.5
INDEMNIFICATION.
(a)
Each
of Zhongshan City Juxian Gas Oven Co., Ltd. and the Shareholders, jointly and
severally, shall defend, indemnify and hold harmless Home System Group, and
its
respective employees, officers, directors, stockholders, controlling persons,
affiliates, agents, successors and assigns (collectively, the “Home
System Group Indemnified Persons”),
and
shall reimburse the Home System Group Indemnified Persons, for, from and against
any loss, liability, claim, damage, expense (including costs of investigation
and defense and reasonable attorneys’ fees) or diminution of value, whether or
not involving a third-party claim (collectively, “Damages”),
directly or indirectly, relating to, resulting from or arising out of:
(i)
any
untrue representations, misrepresentations or breach of warranty by or of
Zhongshan City Juxian Gas Oven Co., Ltd. or the Shareholders contained in or
pursuant to this Agreement.
(ii)
any
breach or nonfulfillment of any covenant, agreement or other obligation by
or of
Zhongshan City Juxian Gas Oven Co., Ltd. or the Shareholders (only to the extent
made or occurring prior to or at the Closing) contained in or pursuant to this
Agreement, the Transaction Agreements executed by Zhongshan City Juxian Gas
Oven
Co., Ltd. or any of the Shareholders in their individual capacity, or any of
the
other agreements, documents, schedules or exhibits to be entered into by
Zhongshan City Juxian Gas Oven Co., Ltd. or any of the Shareholders in their
individual capacity pursuant to or in connection with this Agreement;
(iii)
all
of Pre-Closing liabilities of Zhongshan City Juxian Gas Oven Co., Ltd. or the
Shareholders; and
(iv)
any
liability, claim, action or proceeding of any kind whatsoever, whether
instituted or commenced prior to or after the Closing Date, which directly
or
indirectly relates to, arises or results from, or occurs in connection with
facts or circumstances relating to the conduct of business of Zhongshan City
Juxian Gas Oven Co., Ltd., or the assets of Zhongshan City Juxian Gas Oven
Co.,
Ltd., or events or circumstances existing on or prior to the Closing Date.
(b)
Home
System Group shall defend, indemnify and hold harmless Zhongshan City Juxian
Gas
Oven Co., Ltd. and its respective affiliates, agents, successors and assigns
(collectively, the “Zhongshan
City Juxian Gas Oven Co., Ltd. Indemnified Persons”),
and
shall reimburse the Zhongshan City Juxian Gas Oven Co., Ltd. Indemnified
Persons, for, from and against any Damages, directly or indirectly, relating
to,
resulting from or arising out of:
(i)
any
untrue representation, misrepresentation or breach of warranty by or of Home
System Group contained in or pursuant to this Agreement;
(ii)
any
breach or nonfulfillment of any covenant, agreement or other obligations by
or
of Home System Group contained in or pursuant to this Agreement, the Transaction
Agreements or any other agreements, documents, schedules or exhibits to be
entered into or delivered to pursuant to or in connection with this Agreement.
(c)
Promptly after receipt by an indemnified Party under Section 5.5 of this
Agreement of notice of a claim against it (“Claim”),
such
indemnified Party shall, if a claim is to be made against an indemnifying Party
under such Section, give notice to the indemnifying Party of such Claim, but
the
failure to so notify the indemnifying Party will not relieve the indemnifying
Party of any liability that it may have to any indemnified Party, except to
the
extent that the indemnifying Party demonstrates that the defense of such action
is prejudiced by the indemnified Party’s failure to give such notice.
(d)
A
claim for indemnification for any matter not involving a third-party claim
may
be asserted by notice to the Party from whom indemnification is sought.
ARTICLE
VI.
CLOSING
CONDITIONS OF HOME SYSTEM GROUP
Home
System Group’s obligations to affect the Closing and consummate the Exchange are
subject to the satisfaction of each of the following conditions:
6.1
ACCURACY
OF REPRESENTATIONS AND WARRANTIES.
The
representations and warranties of Zhongshan City Juxian Gas Oven Co., Ltd.
and
the Shareholders in this Agreement shall have been true and correct as of the
date of this Agreement and shall be true and correct on and as of the Closing.
Zhongshan City Juxian Gas Oven Co., Ltd. and the Shareholders shall have
performed all obligations in this Agreement required to be performed or observed
by them on or prior to the Closing.
6.2
ADDITIONAL
CONDITIONS TO CLOSING.
(a)
All
necessary approvals under federal and state securities laws and other
authorizations relating to the issuance of the Acquisition Shares and the
transfer of the Shares shall have been received.
(b)
No
preliminary or permanent injunction or other order by any federal, state or
foreign court of competent jurisdiction which prohibits the consummation of
the
Exchange shall have been issued and remain in effect. No statute, rule,
regulation, executive order, stay, decree, or judgment shall have been enacted,
entered, issued, promulgated or enforced by any court or governmental authority
which prohibits or restricts the consummation of the Exchange. All
authorizations, consents, orders or approvals of, or declarations or filings
with, and all expirations of waiting periods imposed by, any Governmental Body
which are necessary for the consummation of the Exchange, other than those
the
failure to obtain which would not materially adversely affect the consummation
of the Exchange or in the aggregate have a material adverse effect on Home
System Group and its subsidiaries, taken as a whole, shall have been filed,
occurred or been obtained (all such permits, approvals, filings and consents
and
the lapse of all such waiting periods being referred to as the “Requisite
Regulatory Approvals”)
and
all such Requisite Regulatory Approvals shall be in full force and effect.
(c)
There
shall not be any action taken, or any statute, rule, regulation or order
enacted, entered, enforced or deemed applicable to the Exchange, by any
Governmental Body which, in connection with the grant of a Requisite Regulatory
Approval, imposes any material condition or material restriction upon Home
System Group or its subsidiaries or Zhongshan City Juxian Gas Oven Co., Ltd.,
including, without limitation, requirements relating to the disposition of
assets, which in any such case would so materially adversely impact the economic
or business benefits of the Exchange as to render inadvisable the consummation
of the Exchange.
6.3
PERFORMANCE
OF AGREEMENTS.
Zhongshan
City Juxian Gas Oven Co., Ltd. or the Shareholders, as the case may be, shall
have executed and delivered each of the agreements, instruments and documents
required to be executed and delivered, and performed all actions required to
be
performed by Zhongshan City Juxian Gas Oven Co., Ltd. or any of the
Shareholders, as the case may be, pursuant to this Agreement, except as Home
System Group has otherwise consented in writing.
6.4
NO
MATERIAL ADVERSE CHANGE AND SATISFACTORY DUE DILIGENCE.
There
shall not have been any material adverse change in the business, condition,
assets, liabilities, operations or financial performance of Zhongshan City
Juxian Gas Oven Co., Ltd. since the date of this Agreement as determined by
Home
System Group in its discretion. Home System Group shall be satisfied in all
respects with the results of its due diligence review of Zhongshan City Juxian
Gas Oven Co., Ltd.
6.5 ZHONGSHAN
CITY JUXIAN GAS OVEN CO., LTD. CLOSING CERTIFICATES.
In
addition to the documents required to be received under this Agreement, Home
System Group shall also have received the following documents:
(a)
copies of resolutions of Zhongshan City Juxian Gas Oven Co., Ltd. , certified
by
a Secretary, Assistant Secretary or other appropriate officer of Zhongshan
City
Juxian Gas Oven Co., Ltd., authorizing the execution, delivery and performance
of this Agreement and other Transactional Agreements;
(b)
good
standing certificate from China of Zhongshan City Juxian Gas Oven Co., Ltd.;
and
(c)
such
other documents as Home System Group may request in good faith for the purpose
of (i) evidencing the accuracy of any representation or warranty made by
Zhongshan City Juxian Gas Oven Co., Ltd., (ii) evidencing the compliance by
Zhongshan City Juxian Gas Oven Co., Ltd., or the performance by Zhongshan City
Juxian Gas Oven Co., Ltd. of, any covenant or obligation set forth in this
Agreement or any of the other Transactional Agreements, (iii) evidencing the
satisfaction of any condition set forth in Article VII or this Article VI,
or
(iv) otherwise facilitating the consummation or performance of the Exchange.
6.6
TRANSACTIONAL
AGREEMENTS.
Each
Person (other than Home System Group) shall have executed and delivered prior
to
or on the Closing Date all Transactional Agreements to which it is to be a
party.
6.7
RESIGNATION
OF DIRECTORS AND OFFICERS.
Home
System Group shall have received a written resignation from each of the
directors and officers of Zhongshan City Juxian Gas Oven Co., Ltd. effective
as
of the Closing.
6.8
DELIVERY
OF STOCK CERTIFICATES, MINUTE BOOK AND CORPORATE SEAL.
The
Shareholders shall have delivered to Home System Group the stock books, stock
ledgers, minute books and corporate seals of Zhongshan City Juxian Gas Oven
Co.,
Ltd.
ARTICLE
VII.
CLOSING
CONDITIONS OF THE SHAREHOLDERS
The
Shareholders’ obligations to affect the Closing and consummate the Exchange are
subject to the satisfaction of each of the following conditions:
7.1
ACCURACY
OF REPRESENTATIONS AND WARRANTIES.
The
representations and warranties of Home System Group in this Agreement shall
have
been true and correct as of the date of this Agreement and shall be true and
correct on and as of the Closing and Home System Group shall have performed
all
obligations in this Agreement required to be performed or observed by them
on or
prior to the Closing.
7.2
ADDITIONAL
CONDITIONS TO CLOSING.
(a)
All
necessary approvals under federal and state securities laws and other
authorizations relating to the issuance and transfer of the Acquisition Shares
by Home System Group and the transfer of the Shares by Zhongshan City Juxian
Gas
Oven Co., Ltd. shall have been received.
(b)
No
preliminary or permanent injunction or other order by any federal, state or
foreign court of competent jurisdiction which prohibits the consummation of
the
Exchange shall have been issued and remain in effect. No statute, rule,
regulation, executive order, stay, decree, or judgment shall have been enacted,
entered, issued, promulgated or enforced by any court or governmental authority
which prohibits or restricts the consummation of the Exchange. All Requisite
Regulatory Approvals shall have been filed, occurred or been obtained and all
such Requisite Regulatory Approvals shall be in full force and effect.
(c)
There
shall not be any action taken, or any statute, rule, regulation or order
enacted, entered, enforced or deemed applicable to the Exchange, by any federal
or state Governmental Body which, in connection with the grant of a Requisite
Regulatory Approval, imposes any condition or restriction upon the Surviving
Corporation or its subsidiaries (or, in the case of any disposition of assets
required in connection with such Requisite Regulatory Approval, upon Home System
Group, its subsidiaries or Zhongshan City Juxian Gas Oven Co., Ltd. or any
of
their subsidiaries), including, without limitation, requirements relating to
the
disposition of assets, which in any such case would so materially adversely
impact the economic or business benefits of the Exchange as to render
inadvisable the consummation of the Exchange.
7.3
HOME
SYSTEM GROUP CLOSING CERTIFICATES.
The
Shareholders shall have received the following documents:
(a)
copies of resolutions of Home System Group, certified by a Secretary, Assistant
Secretary or other appropriate officer of Home System Group, authorizing the
execution, delivery and performance of the Transactional Agreements and the
Exchange;
(b)
good
standing certificates for the State of Nevada; and
(c)
such
other documents as Zhongshan City Juxian Gas Oven Co., Ltd. may request in
good
faith for the purpose of (i) evidencing the accuracy of any representation
or
warranty made by Home System Group, (ii) evidencing the compliance by Home
System Group with, or the performance by Home System Group of, any covenant
or
obligation set forth in this Agreement or any of the other Transactional
Agreements, (iii) evidencing the satisfaction of any condition set forth in
Article VI or this Article VII, or (iv) otherwise facilitating the consummation
or performance of the Exchange.
7.4
NO
MATERIAL ADVERSE CHANGE.
There
shall not have been any material adverse change in Home System Group’s business,
condition, assets, liabilities, operations or financial performance since the
date of this Agreement.
7.5
PERFORMANCE
OF AGREEMENTS.
Home
System Group shall have executed and delivered each of the agreements,
instruments and documents required to be executed and delivered, and performed
all actions required by Home System Group pursuant to this Agreement, except
as
Zhongshan City Juxian Gas Oven Co., Ltd. and the Shareholders have otherwise
consented in writing.
7.6
CONSENTS.
Each
of
the Consents identified or required to have been identified in Section 3.4
shall
have been obtained and shall be in full force and effect, other than those
Consents the absence of which shall not have a material adverse effect on Home
System Group.
7.7
HOME
SYSTEM GROUP STOCK.
On
the
Closing Date, shares of Home System Group Common Stock shall be eligible for
quotation on the OTC Bulletin Board.
ARTICLE
VIII.
FURTHER
ASSURANCES
Each
of
the parties hereto agrees that it will, from time to time after the date of
the
Agreement, execute and deliver such other certificates, documents and
instruments and take such other action as may be reasonably requested by the
other party to carry out the actions and transactions contemplated by this
Agreement, including the closing conditions described in Articles VI and VII.
Zhongshan City Juxian Gas Oven Co., Ltd. and the Shareholders shall reasonably
cooperate with Home System Group in its of the books and records of Zhongshan
City Juxian Gas Oven Co., Ltd., or in preparing any solicitation materials
to be
sent to the shareholders of Home System Group in connection with the approval
of
the Exchange and the transactions contemplated by the Transactional Agreements.
ARTICLE
IX.
TERMINATION
9.1
TERMINATION.
This
Agreement may be renegotiated or terminated and the Exchange abandoned at any
time prior to the Closing Date:
(a)
by
mutual written consent of Home System Group, Holy (HK) Limited, Oceanic Well
Profit, Inc., Zhongshan City Juxian Gas Oven Co., Ltd. and the Shareholders;
(b)
by
Home System Group if it is not satisfied with the results of its due diligence
of Zhongshan City Juxian Gas Oven Co., Ltd. for any reason;
(c)
by
Home System Group if (i) there is a material Breach of any covenant or
obligation of Zhongshan City Juxian Gas Oven Co., Ltd. or the Shareholders;
provided however, that if such Breach or Breaches are capable of being cured
prior to the Closing Date, such Breach or Breaches shall not have been cured
within 10 days of delivery of the written notice of such Breach, or (ii) Home
System Group reasonably determines that the timely satisfaction of any condition
set forth in Article VI has become impossible or impractical (other than as
a
result of any failure on the part of Home System Group to comply with or perform
its covenants and obligations under this Agreement or any of the other
Transactional Agreements);
(d)
by
Zhongshan City Juxian Gas Oven Co., Ltd. if (i) there is a material Breach
of
any covenant or obligation of Home System Group; provided however, that if
such
Breach or Breaches are capable of being cured prior to the Closing Date, such
Breach or Breaches shall not have been cured within 10 days of delivery of
the
written notice of such Breach, or (ii) Zhongshan City Juxian Gas Oven Co.,
Ltd.
reasonably determines that the timely satisfaction of any condition set forth
in
Article VII has become impossible or impractical (other than as a result of
any
failure on the part of Zhongshan City Juxian Gas Oven Co., Ltd. or any
Shareholder to comply with or perform any covenant or obligation set forth
in
this Agreement or any of the other Transactional Agreements);
(e)
by
Home System Group if the Closing has not taken place on or before June
30,
2007(except
if as a result of any failure on the part of Home System Group to comply with
or
perform its covenants and obligations under this Agreement or in any other
Transactional Agreement);
(f)
by
Zhongshan City Juxian Gas Oven Co., Ltd. if the Closing has not taken place
on
or before June
30,
2007 (except
if as a result of the failure on the part of Zhongshan City Juxian Gas Oven
Co.,
Ltd. or the Shareholders to comply with or perform any covenant or obligation
set forth in this Agreement or in any other Transactional Agreement);
(g)
by
any of Home System Group, on the one hand or Zhongshan City Juxian Gas Oven
Co.,
Ltd., on the other hand, if any court of competent jurisdiction in the United
States or other United States governmental body shall have issued an order,
decree or ruling or taken any other action restraining, enjoining or otherwise
prohibiting the Exchange and such order, decree, ruling or any other action
shall have become final and non-appealable; provided, however, that the party
seeking to terminate this Agreement pursuant to this clause (g) shall have
used
all commercially reasonable efforts to remove such order, decree or ruling;
or
(h)
The
parties hereby agree and acknowledge that a breach of the provisions of Sections
4.1, 4.2, 4.3, 4.4 and 4.6 are, without limitation, material Breaches of this
Agreement.
9.2
TERMINATION
PROCEDURES.
If
Home
System Group wishes to terminate this Agreement pursuant to Section 9.1, Home
System Group shall deliver to the Shareholders and Zhongshan City Juxian Gas
Oven Co., Ltd. a written notice stating that Home System Group is terminating
this Agreement and setting forth a brief description of the basis on which
Home
System Group is terminating this Agreement. If Zhongshan City Juxian Gas Oven
Co., Ltd. wishes to terminate this Agreement pursuant to Section 9.1, Zhongshan
City Juxian Gas Oven Co., Ltd., as applicable, shall deliver to Home System
Group a written notice stating that Zhongshan City Juxian Gas Oven Co., Ltd.
is
terminating this Agreement and setting forth a brief description of the basis
on
which Zhongshan City Juxian Gas Oven Co., Ltd. is terminating this Agreement.
9.3
EFFECT
OF TERMINATION.
In
the
event of termination of this Agreement as provided above, this Agreement shall
forthwith have no further effect. Except for a termination resulting from a
Breach by a party to this Agreement, there shall be no liability or obligation
on the part of any party hereto. In the event of a breach, the remedies of
the
non-breaching party shall be to seek damages from the breaching party or to
obtain an order for specific performance, in addition to or in lieu of other
remedies provided herein. Upon request after termination, each party will
redeliver or, at the option of the party receiving such request, destroy all
reports, work papers and other material of any other party relating to the
Exchange, whether obtained before or after the execution hereof, to the party
furnishing same; provided, however, that Zhongshan City Juxian Gas Oven Co.,
Ltd. and the Shareholders shall, in all events, remain bound by and continue
to
be subject to Section 4.6 and all parties shall in all events remain bound
by
and continue to be subject to Section 5.4 and 5.5.
Notwithstanding
the above, both Home System Group, on the one hand, and Zhongshan City Juxian
Gas Oven Co., Ltd. and the Shareholders, on the other hand, shall be entitled
to
announce the termination of this Agreement by means of a mutually acceptable
press release.
ARTICLE
X.
MISCELLANEOUS
10.1
SURVIVAL
OF REPRESENTATIONS AND WARRANTIES.
All
representations and warranties of Zhongshan City Juxian Gas Oven Co., Ltd.
and
the Shareholders in this Agreement shall survive for a period of 24 months
after
the Closing. The right to indemnification, reimbursement or other remedy based
on such representations and warranties will not be affected by any investigation
conducted by the parties.
10.2
EXPENSES.
Except
as
otherwise set forth herein, each of the parties to the Exchange shall bear
its
own expenses incurred in connection with the negotiation and consummation of
the
transactions contemplated by this Agreement.
10.3
ENTIRE
AGREEMENT.
This
Agreement and the other Transactional Agreements contain the entire agreement
of
the parties hereto, and supersede any prior written or oral agreements between
them concerning the subject matter contained herein, or therein. There are
no
representations, agreements, arrangements or understandings, oral or written,
between the parties to this Agreement, relating to the subject matter contained
in this Agreement and the other Transaction Agreements, which are not fully
expressed herein or therein. The schedules and each exhibit attached to this
Agreement or delivered pursuant to this Agreement are incorporated herein by
this reference and constitute a part of this Agreement.
10.4
COUNTERPARTS
This
Agreement may be executed in any number of counterparts, each of which shall
be
deemed an original but all of which shall constitute one and the same
instrument.
10.5
DESCRIPTIVE
HEADINGS.
The
Article and Section headings in this Agreement are for convenience only and
shall not affect the meanings or construction of any provision of this
Agreement.
10.6
NOTICES.
Any
notices required or permitted to be given under this Agreement shall be in
writing and shall be deemed sufficiently given on the earlier to occur of the
date of personal delivery, the date of receipt or three (3) days after posting
by overnight courier or registered or certified mail, postage prepaid, addressed
as
follows:
|
If
to Home System Group:
|
|
Oceanic
Industry Park, sha gang highway, Gang Kou Town,
Zhongshan
City, Guangdong, China P.C. 528447
|
|
If
to Zhongshan City Juxian
Gas
Oven Co., Ltd.:
|
|
Xx.00
Xxxxxx Xx. xxxx, Xxxxxxxx Xxxx
Xxxxxxxxx
Xxxx, Xxxxxxxxx, China. P.C.528425
|
|
If
to the Shareholders:
|
|
Oceanic
Industry Park, sha gang highway, Gang Kou Town,
Zhongshan
City, Guangdong, China P.C. 528447
|
10.7
CHOICE
OF LAW.
This
Agreement shall be construed in accordance with and governed by the laws of
the
State of New York without regard to choice of law principles. The parties hereto
each consent to the jurisdiction of the courts of the state of New York, county
of New York and to the federal courts located in the county of New York, State
of New York.
10.8
BINDING
EFFECT; BENEFITS.
This
Agreement shall inure to the benefit of and be binding upon the parties and
their respective successors and permitted assigns. Nothing in this Agreement,
express or implied, is intended to confer on any Person other than the parties
or their respective successors and permitted assigns, the Shareholders and
other
Persons expressly referred to herein, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
10.9
ASSIGNABILITY.
Neither
this Agreement nor any of the parties’ rights hereunder shall be assignable by
any party without the prior written consent of the other parties and any
attempted assignment without such consent shall be void.
10.10
WAIVER
AND AMENDMENT.
Any
term
or provision of this Agreement may be waived at any time by the party, which
is
entitled to the benefits thereof. The waiver by any party of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of
any
subsequent breach. The parties may, by mutual agreement in writing, amend this
Agreement in any respect. Zhongshan City Juxian Gas Oven Co., Ltd. and the
Shareholders hereby acknowledge their intent that this Agreement includes as
a
party any holder of capital stock in Zhongshan City Juxian Gas Oven Co., Ltd.
at
the time of Closing. Home System Group, Oceanic Well Profit, Inc., Zhongshan
City Juxian Gas Oven Co., Ltd. and the Shareholders therefore agree that this
Agreement may be amended, without the further consent of any party to this
Agreement, (i) to add as a new Shareholder any existing shareholder of Zhongshan
City Juxian Gas Oven Co., Ltd. and (ii) to modify Schedule 1 to reflect the
addition of such shareholder.
10.11
ATTORNEYS’
FEES.
In
the
event of any action or proceeding to enforce the terms and conditions of this
Agreement, the prevailing party shall be entitled to an award of reasonable
attorneys’ and experts’ fees and costs, in addition to such other relief as may
be granted.
10.12
SEVERABILITY.
If
any
provision of this Agreement is held invalid or unenforceable by any court of
competent jurisdiction, the other provisions of this Agreement will remain
in
full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to
the
extent not held invalid or unenforceable.
10.13
CONSTRUCTION.
In
executing this Agreement, the parties severally acknowledge and represent that
each: (a) has fully and carefully read and considered this Agreement; (b) has
or
has had the opportunity to consult independent legal counsel regarding the
legal
effect and meaning of this document and all terms and conditions hereof; (c)
has
been afforded the opportunity to negotiate as to any and all terms hereof;
and
(d) is executing this Agreement voluntarily, free from any influence, coercion
or duress of any kind. The language used in this Agreement will be deemed to
be
the language chosen by the parties to express their mutual intent, and no rule
of strict construction will be applied against any party.
IN
WITNESS WHEREOF, this Agreement has been executed by the parties hereto as
of
the day and year first above written.
|
Home
System Group
|
||
| |
|
|
| By: | /s/ | |
|
Name:
Xxxxxx Xx
|
||
| Title: CEO | ||
|
Zhongshan
City Juxian Gas Oven Co., Ltd.
|
||
| |
|
|
| By: | /s/ | |
|
Name:
Xxxxxxxxx Xxxxx
|
||
| By: | /s/ | |
|
Name:
Xxxxxxxx Xxxxx
|
||
| By: | /s/ | |
|
Name:
Xxxxxxxx Xxxxx
|
||
| Shareholders: | ||
| See attached Shareholder signature pages | ||
EXHIBIT
A
CERTAIN
DEFINITIONS
For
purposes of the Agreement (including this Exhibit A):
“Agreement”
shall
mean the Share Exchange Agreement to which this Exhibit A is, as it may be
amended from time to time.
“Approved
Plans”
shall
mean a stock option or similar plan for the benefit of employees or others,
which has been approved by the shareholders of Zhongshan City Juxian Gas Oven
Co., Ltd.
“Breach”
There
shall be deemed to be a “Breach” of a representation, warranty, covenant,
obligation or other provision if there is or has been any inaccuracy in or
breach of, or any failure to comply with or perform, such representation,
warranty, covenant, obligation or other provision.
“Certificates”
shall
have the meaning specified in Section 1.3 of the Agreement.
“Closing”
shall
have the meaning specified in Section 1.5 of the Agreement.
“Closing
Date”
shall
have the meaning specified in Section 1.5 of the Agreement.
“Code”
shall
have the meaning specified in the Recitals of this Agreement.
“Confidential
Information”
shall
mean all nonpublic information disclosed by one party or its agents (the
“Disclosing
Party”)
to the
other party or its agents (the “Receiving
Party”)
that
is designated as confidential or that, given the nature of the information
or
the circumstances surrounding its disclosure, reasonably should be considered
as
confidential. Confidential Information includes, without limitation (i)
nonpublic information relating to the Disclosing Party’s technology, customers,
vendors, suppliers, business plans, intellectual property, promotional and
marketing activities, finances, agreements, transactions, financial information
and other business affairs, and (ii) third-party information that the Disclosing
Party is obligated to keep confidential. Confidential Information does not
include any information that (i) is or becomes publicly available without breach
of this Agreement, (ii) can be shown by documentation to have been known to
the
Receiving Party at the time of its receipt from the Disclosing Party, (iii)
is
received from a third party who, to the knowledge of the Receiving Party, did
not acquire or disclose such information by a wrongful or tortious act, or
(iv)
can be shown by documentation to have been independently developed by the
Receiving Party without reference to any Confidential Information.
“Consent”
shall
mean any approval, consent, ratification, permission, waiver or authorization
(including any Governmental Authorization).
“Home
System Group”
shall
have the meaning specified in the first paragraph of the Agreement.
“Home
System Group Common Stock”
shall
mean the shares of common stock of Home System Group.
“Home
System Group SEC Reports”
shall
have the meaning specified in Section 4.6 of the Agreement.
“Entity”
shall
mean any corporation (including any non profit corporation), general
partnership, limited partnership, limited liability partnership, joint venture,
estate, trust, cooperative, foundation, society, political party, union, company
(including any limited liability company or joint stock company), firm or other
enterprise, association, organization or entity.
“Environmental
Laws”
shall
mean any Law or other requirement relating to the protection of the environment,
health, or safety from the release or disposal of hazardous
materials.
“Environmental
Permit”
means
all licenses, permits, authorizations, approvals, franchises and rights required
under any applicable Environmental Law or Order.
“Equity
Security”
shall
mean any stock or similar security, including, without limitation, securities
containing equity features and securities containing profit participation
features, or any security convertible into or exchangeable for, with or without
consideration, any stock or similar security, or any security carrying any
warrant, right or option to subscribe to or purchase any shares of capital
stock, or any such warrant or right.
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended.
“GAAP”
shall
mean Generally Accepted Accounting Principles, applied on a consistent
basis.
“Governmental
Authorization”
shall
mean any:
(a)
permit, license, certificate, franchise, concession, approval, consent,
ratification, permission, clearance, confirmation, endorsement, waiver,
certification, designation, rating, registration, qualification or authorization
that is issued, granted, given or otherwise made available by or under the
authority of any Governmental Body or pursuant to any Law; or
(b)
right
under any contract with any Governmental Body.
“Governmental
Body”
shall
mean any:
(a)
nation, principality, state, commonwealth, province, territory, county,
municipality, district or other jurisdiction of any nature;
(b)
federal, state, local, municipal, foreign or other government;
(c)
governmental or quasi-governmental authority of any nature (including any
governmental division, subdivision, department, agency, bureau, branch, office,
commission, council, board, instrumentality, officer, official, representative,
organization, unit, body or Entity and any court or other tribunal);
or
(d)
individual, Entity or body exercising, or entitled to exercise, any executive,
legislative, judicial, administrative, regulatory, police, military or taxing
authority or power of any nature, including any court, arbitrator,
administrative agency or commissioner, or other governmental authority or
instrumentality.
“Holy
(HK) Limited”
shall
have the meaning specified in the first paragraph of the Agreement.
“Indebtedness”
shall
mean any obligation, contingent or otherwise. Any obligation secured by a Lien
on, or payable out of the proceeds of, or production from, property of the
relevant party will be deemed to be Indebtedness.
“Intellectual
Property”
means
all industrial and intellectual property, including, without limitation, all
U.S. and non-U.S. patents, patent applications, patent rights, trademarks,
trademark applications, common law trademarks, Internet domain names, trade
names, service marks, service xxxx applications, common law service marks,
and
the goodwill associated therewith, copyrights, in both published and unpublished
works, whether registered or unregistered, copyright applications, franchises,
licenses, know-how, trade secrets, technical data, designs, customer lists,
confidential and proprietary information, processes and formulae, all computer
software programs or applications, layouts, inventions, development tools and
all documentation and media constituting, describing or relating to the above,
including manuals, memoranda, and records, whether such intellectual property
has been created, applied for or obtained anywhere throughout the
world.
“Knowledge”
A
corporation shall be deemed to have “knowledge” of a particular fact or matter
only if a director or officer of such corporation has, had or should have had
knowledge of such fact or matter.
“Laws”
means,
with respect to any Person, any U.S. or non-U.S. federal, national, state,
provincial, local, municipal, international, multinational or other law
(including common law), constitution, statute, code, ordinance, rule, regulation
or treaty applicable to such Person.
“Lien”
shall
mean any mortgage, pledge, security interest, encumbrance, lien or charge,
right
of first refusal, encumbrance or other adverse claim or interest of any kind,
including, without limitation, any conditional sale or other title retention
agreement, any lease in the nature thereof and the filing of or agreement to
give any financing statement under the Uniform Commercial Code of any
jurisdiction and including any lien or charge arising by Law.
“Material
Adverse Effect”
means
any change, effect or circumstance which, individually or in the aggregate,
would reasonably be expected to (a) have a material adverse effect on the
business, assets, financial condition or results of operations of the affected
party, in each case taken as a whole or (b) materially impair the ability of
the
affected party to perform its obligations under this Agreement and the
Transaction Agreements, excluding any change, effect or circumstance resulting
from (i) the announcement, pendency or consummation of the transactions
contemplated by this Agreement, (ii) changes in the United States securities
markets generally, or (iii) changes in general economic, currency exchange
rate,
political or regulatory conditions in industries in which the affected party
operates.
“Material
Contract”
means
any and all agreements, contracts, arrangements, understandings, leases,
commitments or otherwise, providing for potential payments by or to the company
in excess of $10,000, and the amendments, supplements and modifications
thereto.
“Order”
shall
mean any award, decision, injunction, judgment, order, ruling, subpoena, or
verdict entered, issued, made, or rendered by any Governmental
Body.
“Ordinary
Course of Business”
shall
mean an action taken by Zhongshan City Juxian Gas Oven Co., Ltd. if
(i)
such action is taken in normal operation, consistent with past practices, (ii)
such action is not required to be authorized by the Shareholders, Board of
Directors or any committee of the Board of the Directors or other governing
body
of Zhongshan City Juxian Gas Oven Co., Ltd. and (iii) does not require any
separate or special authorization or consent of any nature by any Governmental
Body or third party.
“Permitted
Liens”
shall
mean (a) Liens for Taxes not yet payable or in respect of which the validity
thereof is being contested in good faith by appropriate proceedings and for
the
payment of which the relevant party has made adequate reserves; (b) Liens in
respect of pledges or deposits under workmen’s compensation laws or similar
legislation, carriers, warehousemen, mechanics, laborers and material men and
similar Liens, if the obligations secured by such Liens are not then delinquent
or are being contested in good faith by appropriate proceedings conducted and
for the payment of which the relevant party has made adequate reserves; and
(c)
statutory Liens incidental to the conduct of the business of the relevant party
which were not incurred in connection with the borrowing of money or the
obtaining of advances or credits and that do not in the aggregate materially
detract from the value of its property or materially impair the use thereof
in
the operation of its business.
“Person”
shall
mean any individual, Entity or Governmental Body.
“Pre-Closing
Period”
shall
mean the period commencing as of the date of the Agreement and ending on the
Closing Date.
“Proceeding”
shall
mean any action, suit, litigation, arbitration, proceeding (including any civil,
criminal, administrative, investigative or appellate proceeding and any informal
proceeding), prosecution, contest, hearing, inquiry, inquest, audit, examination
or investigation, commenced, brought, conducted or heard by or before, or
otherwise has involved, any Governmental Body or any arbitrator or arbitration
panel.
“Representatives”
of
a
specified party shall mean officers, directors, employees, attorneys,
accountants, advisors and representatives of such party, including, without
limitation, all subsidiaries of such specified party, and all such Persons
with
respect to such subsidiaries. The Related Persons of Zhongshan City Juxian
Gas
Oven Co., Ltd. shall be deemed to be “Representatives” of Zhongshan City Juxian
Gas Oven Co., Ltd., as applicable.
“SEC”
shall
mean the Securities and Exchange Commission.
“Securities
Act”
shall
mean the Securities Act of 1933, as amended.
“Taxes”
shall
mean all foreign, federal, state or local taxes, charges, fees, levies, imposts,
duties and other assessments, as applicable, including, but not limited to,
any
income, alternative minimum or add-on, estimated, gross income, gross receipts,
sales, use, transfer, transactions, intangibles, ad valorem, value-added,
franchise, registration, title, license, capital, paid-up capital, profits,
withholding, payroll, employment, unemployment, excise, severance, stamp,
occupation, premium, real property, recording, personal property, federal
highway use, commercial rent, environmental (including, but not limited to,
taxes under Section 59A of the Code) or windfall profit tax, custom, duty or
other tax, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest, penalties or additions to tax with
respect to any of the foregoing; and “Tax” means any of the foregoing
Taxes.
“Tax
Group”
shall
mean any federal, state, local or foreign consolidated, affiliated, combined,
unitary or other similar group of which Zhongshan City Juxian Gas Oven Co.,
Ltd.
is now or was formerly a member.
“Tax
Return”
shall
mean any return, declaration, report, claim for refund or credit, information
return, statement or other similar document filed with any Governmental Body
with respect to Taxes, including any schedule or attachment thereto, and
including any amendment thereof.
“Transactional
Agreements”
shall
mean the Agreement and all other agreements and documents required pursuant
to
the terms of the Agreement.
“Zhongshan
City Juxian Gas Oven Co., Ltd.”
shall
have the meaning specified in the first paragraph of the Agreement.
“Zhongshan
City Juxian Gas Oven Co., Ltd Balance Sheet”
shall
mean Zhongshan City Juxian Gas Oven Co., Ltd.’s audited balance sheet at
December 31, 2005 and December 31, 2006.
“Zhongshan
City Juxian Gas Oven Co., Ltd. Common Stock”
shall
mean the shares of common stock of Zhongshan City Juxian Gas Oven Co.,
Ltd.
EXHIBIT
B
FORM
OF PROMISSORY NOTE
HOME
SYSTEM GROUP.
PROMISSORY
NOTE
|
|
NO.
1
|
$3,400,000
|
April
___, 2007
|
FOR
VALUE
RECEIVED, the undersigned, Home System., a Nevada corporation (the “Maker”),
hereby promises to pay to the order of Xxxxxxxxx
Xxxxx
(the
“Payee”), the principal amount of
$3,400,000,
all in
accordance with the provisions of this promissory note.
1.
Payment of Principal. The full amount of the principal of this promissory note
shall be due and payable as follows: $1,700,000 on the close of business on
the
first anniversary of the Closing of the transactions contemplated by that
certain Share Exchange Agreement dated the date hereof, and $1,700,000 the
close
of business on the first anniversary of the Closing of the transactions
contemplated by that certain Share Exchange Agreement dated the date hereof.
(the “Maturity Date”).
2.
No
Interest. Under no circumstances shall interest accrue or be charged on the
unpaid principal balance of this promissory note.
3.
Method
of Payment. Payments hereunder shall be in lawful money of the United States
and
shall be made to Payee at the following address or at such other place as Payee
may designate to Maker in writing: x/x Xx.00
Xxxxxx Xx. xxxx, Xxxxxxxx Xxxx Xxxxxxxxx, Xxxxxxxxx, Xxxxx.
P.C:528425
4.
Prepayment. This promissory note may be prepaid in whole or in part at any
time
without penalty or premium by payment of all or any part of the outstanding
principal amount.
5.
Unconditional Payment Obligation. No provision of this promissory note shall
alter or impair the obligation of the Maker, which is absolute and
unconditional, to pay the principal of this promissory note at the time and
place and in the currency herein prescribed.
6.
Events
of Default. If any of the following events (“Events of Default”) shall occur,
Payee may, by notice to Maker, declare this promissory note and all amounts
payable hereunder to be due and payable, whereupon the same shall become
immediately due and payable:
(a)
Maker
shall become insolvent or admit in writing its inability to pay its debts as
they become due, or shall make a general assignment for the benefit of
creditors;
(b)
Any
proceedings shall be instituted by or against Maker seeking either (i) an order
for relief with respect to, or reorganization, arrangement, adjustment or
composition of, its debts under the United States Bankruptcy Code or under
any
other law relating to bankruptcy, insolvency, reorganization, or relief of
debtors, or (ii) appointment of a trustee, receiver or similar official for
Maker or for any substantial part of its property;
(c)
Maker's failure to conduct business in the ordinary course, dissolution or
termination of existence; or
(d)
Maker's failure after the Maturity Date to repay the amounts due hereunder
within ten (10) days of receiving written notice from Payee that such amounts
are due and payable.
7.
Waiver
of Notice. Maker hereby waives presentment, demand, notice, protest and all
other demands and notices in connection with the delivery, acceptance,
performance and enforcement of this promissory note, and assents to extension
of
the time of payment or forbearance or other indulgence without
notice.
8.
Governing Law. This promissory note shall be construed in accordance with the
laws of the State of New York, without regard to its conflicts of laws
rules.
9.
Notices. All notices, requests, demands and other communications with respect
to
this promissory note shall be given in person or forwarded by first class United
States mail, postage prepaid, registered or certified mail, with return receipt
requested, addressed to the party's address. Any notice, request, demand or
communication shall be deemed validly given and received upon delivery if given
in person, and on the 5th business day after deposit in the United States mail
if given by mail as provided for in the preceding sentence.
IN
WITNESS WHEREOF, the Maker has executed and delivered this Note effective as
of
April___,
2007
|
|
|
HOME
SYSTEM GROUP.
|
|
|
|
Chairman
of the Board and
|
|
|
Chief
Executive Officer
|
|
HOME
SYSTEM GROUP
PROMISSORY
NOTE
|
|
NO.
2
|
$3,300,000
|
April
___, 2007
|
FOR
VALUE
RECEIVED, the undersigned, Home System., a Nevada corporation (the “Maker”),
hereby promises to pay to the order of Xxxxxxxx
Xxxxx
(the
“Payee”), the principal amount of
$3,300,000,
all in
accordance with the provisions of this promissory note.
1.
Payment of Principal. The full amount of the principal of this promissory note
shall be due and payable as follows: $1,650,000 on the close of business on
the
first anniversary of the Closing of the transactions contemplated by that
certain Share Exchange Agreement dated the date hereof, and $1,650,000 the
close
of business on the first anniversary of the Closing of the transactions
contemplated by that certain Share Exchange Agreement dated the date hereof.
(the “Maturity Date”).
2.
No
Interest. Under no circumstances shall interest accrue or be charged on the
unpaid principal balance of this promissory note.
3.
Method
of Payment. Payments hereunder shall be in lawful money of the United States
and
shall be made to Payee at the following address or at such other place as Payee
may designate to Maker in writing: x/x Xx.00
Xxxxxx Xx. xxxx, Xxxxxxxx Xxxx Xxxxxxxxx, Xxxxxxxxx, Xxxxx.
P.C:528425
4.
Prepayment. This promissory note may be prepaid in whole or in part at any
time
without penalty or premium by payment of all or any part of the outstanding
principal amount.
5.
Unconditional Payment Obligation. No provision of this promissory note shall
alter or impair the obligation of the Maker, which is absolute and
unconditional, to pay the principal of this promissory note at the time and
place and in the currency herein prescribed.
6.
Events
of Default. If any of the following events (“Events of Default”) shall occur,
Payee may, by notice to Maker, declare this promissory note and all amounts
payable hereunder to be due and payable, whereupon the same shall become
immediately due and payable:
(a)
Maker
shall become insolvent or admit in writing its inability to pay its debts as
they become due, or shall make a general assignment for the benefit of
creditors;
(b)
Any
proceedings shall be instituted by or against Maker seeking either (i) an order
for relief with respect to, or reorganization, arrangement, adjustment or
composition of, its debts under the United States Bankruptcy Code or under
any
other law relating to bankruptcy, insolvency, reorganization, or relief of
debtors, or (ii) appointment of a trustee, receiver or similar official for
Maker or for any substantial part of its property;
(c)
Maker's failure to conduct business in the ordinary course, dissolution or
termination of existence; or
(d)
Maker's failure after the Maturity Date to repay the amounts due hereunder
within ten (10) days of receiving written notice from Payee that such amounts
are due and payable.
7.
Waiver
of Notice. Maker hereby waives presentment, demand, notice, protest and all
other demands and notices in connection with the delivery, acceptance,
performance and enforcement of this promissory note, and assents to extension
of
the time of payment or forbearance or other indulgence without
notice.
8.
Governing Law. This promissory note shall be construed in accordance with the
laws of the State of New York, without regard to its conflicts of laws
rules.
9.
Notices. All notices, requests, demands and other communications with respect
to
this promissory note shall be given in person or forwarded by first class United
States mail, postage prepaid, registered or certified mail, with return receipt
requested, addressed to the party's address. Any notice, request, demand or
communication shall be deemed validly given and received upon delivery if given
in person, and on the 5th business day after deposit in the United States mail
if given by mail as provided for in the preceding sentence.
IN
WITNESS WHEREOF, the Maker has executed and delivered this Note effective as
of
April___,
2007
|
|
|
HOME
SYSTEM GROUP.
|
|
|
|
|
|
|
|
Chairman
of the Board and
|
|
|
Chief
Executive Officer
|
|
HOME
SYSTEM GROUP
PROMISSORY
NOTE
|
|
NO.
3
|
$3,300,000
|
April
___, 2007
|
FOR
VALUE
RECEIVED, the undersigned, Home System., a Nevada corporation (the “Maker”),
hereby promises to pay to the order of Xxxxxxxx
Xxxxx
(the
“Payee”), the principal amount of
$3,300,000,
all in
accordance with the provisions of this promissory note.
1.
Payment of Principal. The full amount of the principal of this promissory note
shall be due and payable as follows: $1,650,000 on the close of business on
the
first anniversary of the Closing of the transactions contemplated by that
certain Share Exchange Agreement dated the date hereof, and $1,650,000 the
close
of business on the first anniversary of the Closing of the transactions
contemplated by that certain Share Exchange Agreement dated the date hereof.
(the “Maturity Date”).
2.
No
Interest. Under no circumstances shall interest accrue or be charged on the
unpaid principal balance of this promissory note.
3.
Method
of Payment. Payments hereunder shall be in lawful money of the United States
and
shall be made to Payee at the following address or at such other place as Payee
may designate to Maker in writing: x/x Xx.00
Xxxxxx Xx. xxxx, Xxxxxxxx Xxxx Xxxxxxxxx, Xxxxxxxxx, Xxxxx.
P.C:528425
4.
Prepayment. This promissory note may be prepaid in whole or in part at any
time
without penalty or premium by payment of all or any part of the outstanding
principal amount.
5.
Unconditional Payment Obligation. No provision of this promissory note shall
alter or impair the obligation of the Maker, which is absolute and
unconditional, to pay the principal of this promissory note at the time and
place and in the currency herein prescribed.
6.
Events
of Default. If any of the following events (“Events of Default”) shall occur,
Payee may, by notice to Maker, declare this promissory note and all amounts
payable hereunder to be due and payable, whereupon the same shall become
immediately due and payable:
(a)
Maker
shall become insolvent or admit in writing its inability to pay its debts as
they become due, or shall make a general assignment for the benefit of
creditors;
(b)
Any
proceedings shall be instituted by or against Maker seeking either (i) an order
for relief with respect to, or reorganization, arrangement, adjustment or
composition of, its debts under the United States Bankruptcy Code or under
any
other law relating to bankruptcy, insolvency, reorganization, or relief of
debtors, or (ii) appointment of a trustee, receiver or similar official for
Maker or for any substantial part of its property;
(c)
Maker's failure to conduct business in the ordinary course, dissolution or
termination of existence; or
(d)
Maker's failure after the Maturity Date to repay the amounts due hereunder
within ten (10) days of receiving written notice from Payee that such amounts
are due and payable.
7.
Waiver
of Notice. Maker hereby waives presentment, demand, notice, protest and all
other demands and notices in connection with the delivery, acceptance,
performance and enforcement of this promissory note, and assents to extension
of
the time of payment or forbearance or other indulgence without
notice.
8.
Governing Law. This promissory note shall be construed in accordance with the
laws of the State of New York, without regard to its conflicts of laws
rules.
9.
Notices. All notices, requests, demands and other communications with respect
to
this promissory note shall be given in person or forwarded by first class United
States mail, postage prepaid, registered or certified mail, with return receipt
requested, addressed to the party's address. Any notice, request, demand or
communication shall be deemed validly given and received upon delivery if given
in person, and on the 5th business day after deposit in the United States mail
if given by mail as provided for in the preceding sentence.
IN
WITNESS WHEREOF, the Maker has executed and delivered this Note effective as
of
April___,
2007
|
|
|
HOME
SYSTEM GROUP.
|
|
|
|
|
|
|
|
Chairman
of the Board and
|
|
|
Chief
Executive Officer
|
|
SCHEDULE
I
ZHONGSHAN
CITY JUXIAN GAS OVEN CO., LTD. Shareholders
|
Shareholders
Name
|
|
Ownership
Percentage of Zhongshan City Juxian Gas Oven Co., Ltd.
|
|
Shares
of Home System Group to be issued
|
|
Xxxxxxxxx
Xxxxx
|
|
34%
|
|
340,000shares
|
|
Xxxxxxxx
Xxxxx
|
|
33%
|
|
330,000shares
|
|
Xxxxxxxx
Xxxxx
|
|
33%
|
|
330,000shares
|
IN
WITNESS WHEREOF, the undersigned has executed and delivered this Counterpart
Signature Page as of the (date)
day of
_____ , 2007.
|
Shareholders:
|
||
| |
|
|
| By: | /s/ | |
|
Name: Xxxxxxxxx Xxxxx |
||
| Title: CEO | ||
| By: | ||
|
Name:
Xxxxxxxx Xxxxx
|
||
| By: | ||
|
Name:
Xxxxxxxx Xxxxx
|
||
